Why is Qatar Airways Buying a Stake in LATAM?

Qatar Airways will look to acquire a 10 percent stake in fledgling Chile-based LATAM Airlines.

The move comes as part of a larger investment strategy by Qatar Airways who have looked to increase their investment in other airlines in recent years. In 2015, the company purchased a 1 percent stake in British Airways' parent company IAG and have been looking at a large stake in Italy-based Meridiana.

Earlier in the year, Qatar Airways CEO Akbar Al Baker laid out his vision to Deena Kamel of Bloomberg: "We are looking at many airlines. Either they will be successful airlines or they will be airlines where we see there is high potential and that potential is not being properly exercised."

The investment will spur a new round of funding for LATAM Airlines and will dramatically increase their cash on hand, but will first need to be approved at a September shareholders meeting.

An influx of cash from Qatar Airways doesn't just help the struggling LATAM Airlines financially, it also more solidly connects them not only to a growing and wealthy Middle Eastern market, but also to the rest of the world. Middle Eastern airlines have been rapidly growing due to their geographical location and have smartly marketed themselves as a bit of a gateway between Asian markets and the west.

The stake will be worth around $613 million.

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