Qatar Airways seeks up to 10% stake in American Airlines

Posted June 25, 2017

The surprise investment push by Qatar Airways was disclosed by American Airlines in a securities filing Thursday saying the Qatari company planned to buy at least $808 million in American shares.

American shares were up about 2 percent in regular morning trade.Qatar Airways indicated its interest in buying a stake in American on the open market, American said in a regulatory filing.

"It may just be that Qatar Airways views American Airlines as a solid financial investment", he added.

American chief executive Doug Parker has joined an effort with the leaders of Delta Air Lines and United Airlines to urge a crackdown by 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 those carriers to illegally compete in the U.S. market.

Initially, Trump seemed to welcome Qatar's diplomatic isolation, going so far as to suggest he was partially responsible for the decision.

American's bylaws require board approval to stakes of 4.75 percent or more. Qatar Airways will not exceed 4.75% without prior consent of the American Airlines board.

The airline said in April that it had seen a drop in bookings because of the U.S. and United Kingdom governments' ban on large electronics in the cabins of certain worldwide flights.

Shares of American Airlines rose 1.1 percent to $48.97.

The gulf carrier says it is seeking a stake as large as 10% in American, the world's largest carrier by traffic. It recently announced plans to launch an airline in fast-growing India.

"We can not control who sells or purchases" our stock, Parker said. "The U.S. market is strategically important to Qatar Airways and this would strengthen their ability to feed at the U.S. end", independent aviation consultant John Strickland told Reuters.

"Part of this is an attempt to squelch American's voice as part of that fair and open skies group and to have American stop talking about the effect of the Middle East airlines", said Henry Harteveldt, a travel-industry analyst. To compensate for its size, it is hopscotching the globe, snatching up pieces of other airlines, including British Airways' parent IAG, Chile-based LATAM, and Italy's Meridiana.

"And do not worry, per USA law, no foreign entity can own more than 25% of a US airline", Parker wrote.

A tie-up with American Airlines Group Inc. could help Qatar Airways - Qatar's most recognized global brand - gain influence with both Wall Street and decision-makers in Washington.

Despite the tension, Qatar Airways and American have been partners in the OneWorld alliance since 2013.

Among other things, the management and the employee unions of the Big Three U.S. lines - American, Delta and United - have been waging a very public campaign aimed at curbing the growth of their Middle East rivals.

Shell Asset Management Co. maintained its stake in American Airlines Group, Inc.