Qatar Airways interested in buying 10 percent stake in American Airlines
- Author: Leroy Wright Jun 23, 2017,
Jun 23, 2017, 16:21
Qatar's national carrier plans to spend more than $800 million to purchase up to a 10 percent stake in American Airlines.
The Gulf carrier said it will initially buy some 4.75 percent of American on the open market, the maximum allowed without board approval.
A stake in American Airlines would add to Qatar Airways' investment portfolio. Qatar Airways believes in American Airlines' fundamentals and intends to build a passive position in the company with no involvement in management, operations or governance.
Qatar Airways already holds stakes in other foreign carriers, including a large holding in International Consolidated Airlines Group, the parent of British Airways.
"American Airlines declined comment and it was not clear how American´s board or management would respond to Qatar´s potential investment. Qatar Airways will make all necessary regulatory filings at the appropriate time", it said.
He also said he found Qatar Airways' proposed investment "puzzling given our extremely public stance on the illegal subsidies that Qatar, Emirates and Etihad have all received over the years from their governments".
American has tried to convince two successive US administrations that Qatar and two other state-owned Middle Eastern carriers get illegal subsidies from their governments.
The move came after Saudi Arabia, Bahrain, and the UAE severed ties with Qatar over Doha's alleged support for extremist groups and Iran.
American shares were up about 2 percent in regular morning trade.
American Airlines also noted that foreign ownership laws limited the total percentage of foreign voting interest in a US company to 24.9 percent. Qatar's government denies all the allegations.
Along with United Continental Holdings Inc and Delta Air Lines, American has pressed the USA government to curb US flights by Qatar Airways and rival Gulf carriers Emirates [EMIRA.UL] and Etihad Airways. But the outreach drew a frosty response from the USA carrier.
The CEOs met earlier this month during an airline-industry event in Mexico, according to an American spokesman.
"At these hard times of illegal bans on flights out of my country by big bullies, this is an award not to me, not to my airline, but to my country", he said.
USA airlines and their labor unions were unable to get the Obama administration to accept their accusations that the Middle East airlines receive illegal subsidies.
Had the US government enforced a freeze on Gulf carrier flights requested by the Big Three in 2015, it would have resulted in the loss of 2,650 American jobs in 2015 and 4,400 jobs in 2016.
Qatar Airways CEO Akbar Al Baker is known for his brash style.
"There's a good chance this investment plan by Qatar Airways may have more to do with demonstrating sovereign Qatar's continued commitment to the United States amid the latest Gulf States feud with Qatar", Gimme Credit analyst Vicki Bryan wrote in a research note.