Qatar Airways seeks up to 10% stake in American Airlines

Qatar Airways

Qatar Airways, its Middle Eastern business pressured by a diplomatic row with neighbours, is seeking as much as a 10% stake in American Airlines, the US carrier said.

The surprise investment push by Qatar Airways was disclosed by American Airlines in a securities filing on Thursday, saying the Qatari company planned to buy at least $808 million in American shares. In addition, Qatar Airways’s chief executive told his counterpart at American that the carrier sought a stake of about 10%.

The outreach drew a frosty response from the US carrier, which said the intended purchase “was not solicited by American Airlines and would in no way change the Company’s Board composition, governance, management or strategic direction.”

American’s bylaws require board approval to stakes of 4.75% or more. Qatar Airways said it would not exceed this level without board approval and would “make all necessary regulatory filings.”

“Qatar Airways sees a strong investment opportunity in American Airlines,” the company said in a statement.

“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.”

The move comes after Saudi Arabia, Bahrain, Egypt and the United Arab Emirates severed ties with Qatar over its alleged support for extremist groups and Iran. The countries have suspended all flights to and from Qatar.

Qatar’s government denies the allegations.

Qatar Airways has downplayed the impact of the dispute on its business, saying on June 14 that the “vast majority” of its network was unaffected. But analysts have warned the profitable carrier could take a hit should the diplomatic crisis drag out.

At the Paris Air Show this week, Qatar Airways was named the world’s top airline for passenger service by Skytrax, a closely-watched industry prize.

American has had its differences with Qatar Airways, among other Middle Eastern carriers, over state subsidies the US air travel industry says violate international agreements.

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 the airlines to illegally compete in the US market.

Parker alluded to the controversy in a letter to employees Thursday, which adopted a sceptical tone toward Qatar’s motives.

“While anyone can purchase our shares in the open market, we aren’t particularly excited about Qatar’s outreach, and we find it puzzling given our extremely public stance on the illegal subsidies that Qatar, Emirates and Etihad have all received over the years from their governments,” Parker said.

“If anything, this development strengthens our resolve to ensure the US government enforces its trade agreements regarding fair competition with Gulf carriers, because we must make it crystal clear that no minority investment in American will ever dissuade us from doing what is right for our team members, our customers and all of our shareholders.”

Qatar Airways already holds stakes in other foreign carriers, including a large holding in International Consolidated Airlines Group, the parent of British Airways.