Published: Sun, June 25, 2017
Markets | By Erika Turner

Qatar Airways seeks 10% stake in American Airlines

Qatar Airways seeks 10% stake in American Airlines

American Airlines Group Inc said on Thursday, June 22 that Qatar Airways, the Gulf country's state-owned airline, had expressed interest in buying a 10 percent stake worth at least $808 million in the No.1 USA airline, Reuters says.

Qatar Airways is attempting to buy a 10 percent stake in American Airlines, which has confirmed the move by filing for a required review by the U.S. justice department's antitrust division. Saudi Arabia, the United Arab Emirates, Egypt and Bahrain have barred Qatar Airways flights and forced the Doha-based carrier to alter other flight paths to avoid flying over hostile territory.

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.

On Thursday, Qatar said it plans to buy an initial stake of up to 4.75 percent of American's stock.

American Airlines CEO Doug Parker sent a letter to employees on Thursday in response to Qatar Airways announcing their offer to acquire a 10% stake in the company. Lastly, all USA airlines have foreign ownership restrictions which limit foreign voting interest to 24.9%. This interest in American followed a conversation between the two companies' CEOs, a discussion initiated by Akbar Al Baker, the chief executive of Qatar.

Qatar has filed a notice of intent to invest with the antitrust division of the Justice Department under the Hart-Scott-Rodino Act to purchase at least $808 million of American's common stock. Qatar already owns stakes in International Consolidated Airlines Group (parent of British Airways and Spain's Iberia), and LATAM Airlines. Also, VP Derek J. Kerr sold 104,223 shares of American Airlines Group stock in a transaction on Friday, June 2nd.

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Parker said in his letter that American Airlines "will not be discouraged or dissuaded from our full court press in Washington, D.C., to stand up to companies that are illegally subsidized by their governments".

Qatar is purchasing the shares on the open market, so there is little American Airlines can do now.

American and Qatar are both members of the Oneworld alliance, but the two carriers have been on opposite sides of a fierce dispute over alleged subsidies Qatar and two other Middle Eastern airlines receive from their respective governments.

Both Qatar Airways and American Airlines are members of the group - which promotes coordination among its members to ease travel pains for global fliers. "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.

US airlines and their labor unions were unable to get the Obama administration to accept their accusations that the Middle East airlines receive illegal subsidies. "To some extent, it may give Qatar Airways "veto rights" on access to their networks". This time, it appears, he has also surprised American Airlines.

American, in its filing, noted potential obstacles to Qatar's plan to acquire the stake. Weiss Asset Management LP acquired a new stake in American Airlines Group during the third quarter worth $236,000.

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