Qatar Airways Expresses Interest in 10% Stake in American Airlines

Ivan Schwartz
June 26, 2017

Qatar Airways, one of three Persian Gulf carriers that large U.S. carriers have criticised for unfair competition, is seeking to acquire a major stake in American Airlines Group Inc.

Separately, American Airlines Group Inc (AAL.O) is already part of a push by US carriers to squeeze Qatar out of their domestic market.

The disclosure also stated that Qatar Airways' CEO had approached the head of American and the two have had a conversation about the intended purchase.

The move, disclosed yesterday by American, represents a startling turn in a running battle between United States carriers and their Persian Gulf rivals, which U.S. airline executives say have unfair advantages because of deep government subsidies. That would make the airline one of American's largest shareholders, a group that includes Warren Buffett.

The move comes after Saudi Arabia, Bahrain, Egypt and the United Arab Emirates severed ties with Qatar over its alleged support for extremist groups and Iran.

The U.S. airline giant also added in its regulatory filing that anyone who intends to buy over 4.75% of the company must gain board approval, but it has yet to receive any such request.

Last week, al-Baker said in a statement that Qatar Airways was largely unaffected by the boycott decision, operating some 1,200 flights in the first week of the crisis, 90 percent of which took off within 15 minutes of their scheduled departure times.

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Foreign ownership of US airlines is restricted at 24.9 percent of voting shares under federal law.

Government-owned Qatar Airways has been embroiled in its own troubles, such as the United States electronics ban, and a diplomatic crisis with its neighbors that allege Qatar supports terrorism, which the country denies. His company has bought its way into other airlines, including the parent of British Airways, a close partner of American.

Qatar Airways has notified American Airlines that it wants to buy about a 10 percent stake in the U.S. carrier, which confirmed the move Thursday in a securities filing. Qatar has submitted a filing under the Hart-Scott-Rodino Act related to the intended investment. Why the airline and its CEO chose now to announce their intention to invest in a US carrier is something of a mystery.

American and Qatar are already members of the Oneworld marketing alliance, which allows passengers to earn and redeem points on each other's flights.

American, based in Fort Worth, Texas, said in its regulatory filing that Qatar's proposed investment wouldn't change its board makeup, governance, management or strategic direction.

U.S. commentators suggested the move by Qatar is an attempt to muddy the waters in the battle by the USA carriers against their Gulf counterparts. Shares of American shot up 5.6 percent in pre-market trade.

American shares got lift of 48 cents, or almost 1%, mid-afternoon Thursday, to $48.91.

Other reports by GizPress

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