American Airlines CEO says Qatar proposal makes no sense
- Author: Zachary Reyes Jun 25, 2017,
Jun 25, 2017, 19:28
American said it did not receive such a request, but will respond to Qatar Airlines' notice in accordance with the Hart-Scott Rodino (HSR) Act, which is required for an acquisition of more than $81 million.
Bloomberg quoted American and said Qatar Airways intends to invest at least $808mn in the Fort Worth-based airline.
American's incorporation documents also prohibit anyone from buying more than 4.75 percent of the company's stock without advance approval from American's board of directors. USA laws limit foreign ownership to 24.9 percent.
The state-owned Qatar Airways said it meant to purchase at least $808 million of the American carrier's stock on the open market, according to a Securities and Exchange Commission filing.
In addition, American said it doesn't change the company's belief that there needs to be enforcement of the Open Air agreements with the United Arab Emirates and the nation of Qatar and fair competition with Gulf carriers, including Qatar Airways.
U.S. commentators suggested the move by Qatar is an attempt to muddy the waters in the battle by the United States carriers against their Gulf counterparts. "Qatar Airways will not exceed 4.75% without prior consent of the American Airlines board". The airline is facing significant obstacles from neighboring countries - namely, United Arab Emirates, Bahrain, Egypt and Saudi Arabia - who seek to restrict if not ban Qatar from flying through their airways.
The shares rose 5.5 per cent to US$51.10 at 9:00am in premarket trading in NY. Click to get this free reportAmerican Airlines Group, Inc. "All this is doing is strengthening our resolve to defend our airline, which we will continue doing vigorously".
Qatar Airways is the national carrier of the State of Qatar and has more than 150 business and leisure destinations with a fleet of 200 aircraft.
Qatar Airways has been named Best Airline in the World for 2017 by leading consumer aviation website Skytrax. Qatar already owns a 20% stake in IAG, which is British Airways' parent company, 10% in LATAM and is attempting to purchase a 49% stake in Italian-carrier Meridiana.