Published: Fri, June 23, 2017
Global News | By Stacy Ballard

Qatar Airways seeks stake in American in 'puzzling' move

Qatar Airways seeks stake in American in 'puzzling' move

American Airlines' chief executive said on Thursday he is not "particularly excited" about Qatar Airways' interest in buying up to 10 percent of the US carrier's shares, in a letter to employees following the state-owned Gulf airline's overture.

In a regulatory filing AA said it had received an "unsolicited notice" from the Gulf airline, indicating the carrier's intention to make "a significant investment in American Airlines".

Qatar Airlines plans to invest $808 million in acquiring the stock of American Airlines from the open market.

American Airlines CEO Doug Parker has joined an effort with the leaders of Delta Airlines and United Airlines to urge a crackdown from U.S. President Donald Trump on an alleged $50 billion in state subsidies to Qatar Airways and two other state-backed Middle East carriers that they argue allows the airlines to illegally compete in the U.S. market. It said it sees a "strong investment opportunity" in American, and would be merely a passive investor with no role in American's management or operations.

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Qatar Airways, American Airlines, IAG's British Airways, Iberia and LATAM are all members of the oneworld airline alliance. Qatar Airways said it would not exceed this level without board approval and would "make all necessary regulatory filings". And one of them quoted American Airlines CEO Doug Parker saying Qatar Airways' move as "puzzling".

American also has had its differences with Qatar Airways, among other Middle Eastern carriers, over state subsidies the U.S. air travel industry says violate global agreements. Saudi Arabia, the United Arab Emirates, Egypt and Bahrain have barred Qatar Airways flights.

American shares were up about 2 percent in regular morning trade.

"American Airlines continues to believe that the President and his administration will stand up to foreign governments to end massive carrier subsidies that threaten the U.S. aviation industry and that threaten American jobs", American said.

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The chilly response to Qatar's overture contrasted sharply with the celebratory reaction previous year after USA financier Warren Buffett - a longtime critic of investing in airlines - bought big stakes in American, Delta, United and Southwest. Earlier this month he called competition from the state-owned Persian Gulf carriers the biggest threat he has ever seen to US aviation. The U.S. airlines have not yet lodged a formal complaint with the U.S. Department of Transportation, and the travel association wants the carriers to stop spending millions of dollars on lobbying and either file a complaint or shut up. American says it has not received such a request yet.

Al-Baker, highly critical of the blocking of airspace, has said Qatar Airways would use the aircraft used to fly to those countries for fast-track expansion plans elsewhere.

American Airlines also noted that foreign ownership laws limited the total percentage of foreign voting interest in a US company to 24.9 percent. The countries have suspended all flights to and from Qatar.

Qatar said in a statement that it hopes to continue that relationship.

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