Qatar Airways seeks 10% stake in American Airlines

by Ben Pena June 25, 2017, 1:10

The Qatar Airways intention of investment was also announced by American Airlines in a securities filing Thursday saying the Qatari company planned to buy at least 808 million dollars in American shares, a foreign media report said.

American CEO Doug Parker is not amused.

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".

In addition, Qatar Airways' chief executive told his counterpart at American that the carrier sought a stake of about 10 per cent. The company has also been open with American Airlines Group Inc about acquiring the stake.

American said its certificate of incorporation prohibits anyone from acquiring 4.75 percent or more of the company's outstanding stock without advance approval from the board following a written request. But the company's board will have to approve any stake larger than 4.75%, and foreign voting interest is capped at 24.9%. Qatar Airways has submitted a filing under the Hart-Scott-Rodino Act (HSR) with respect to its potential investment in American Airlines common stock (more than an $81m investment requires DoJ approval, typically 30-day process). Pitcairn Co.'s holdings in American Airlines Group were worth $1,104,000 at the end of the most recent reporting period. The Stock is active as 6.29M shares changed hands versus its average volume of 5.53M shares.

The move, disclosed yesterday by American, represents a startling turn in a running battle between United States carriers and their Persian Gulf rivals, which USA airline executives say have unfair advantages because of deep government subsidies.

This follows an announcement on Tuesday, which revealed that Qatar Airways had been awarded the World's Best Airline in 2017 at the SKYTRAX World Airline Awards. The U.S. carriers are trying to block the three Gulf airlines from expanding service to the U.S. The agreements extend reciprocal access to US carriers.

Government-owned Qatar Airways has been embroiled in its own troubles, such as the U.S. electronics ban, and a diplomatic crisis with its neighbors that allege Qatar supports terrorism, which the country denies.

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President Donald Trump has accused Qatar, home to a massive and strategic USA military base, of funding terrorism. BidaskClub downgraded shares of American Airlines Group from a "strong-buy" rating to a "buy" rating in a research note on Friday, June 16th.

Barclays PLC restated their equal weight rating on shares of American Airlines Group, Inc. American and the others are now pressing their case with President Donald Trump.

Qatar Airways, American Airlines, IAG's British Airways, Iberia and LATAM, are all members of the oneworld airline alliance.

American's unions, who fear job losses if Middle East carriers expand service to the US, reacted with apprehension to the news of Qatar's interest in their company. Dennis Tajer, a spokesman for the Allied Pilots Association, accused Qatar of "asymmetric financial warfare".

"This is an adversary of ours, and suddenly it has come to the front door with cash that it got from its rich uncle, the country that runs them, and says 'We're here to buy some property, '" Tajer said.

Parker's feeling has been echoed throughout the airline industry and on Wall Street.

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

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