Published: Sun, June 25, 2017
Economy | By Melissa Porter

Qatar Airways seeks 10 pct stake in American Airlines

USA carrier files for required permit to allow Qatar's state-owned carrier to buy 10-percent stake in American Airlines.

American said that Qatar's proposed investment doesn't change its belief that there needs to be enforcement of the Open Air agreements with the United Arab Emirates and the nation of Qatar and fair competition with Gulf carriers, including Qatar Airways.

The potential investment is worth at least $808 million, American said in a regulatory filing on Thursday, and would put Qatar Airways' stake on par with Warren Buffett's Berkshire Hathaway Inc (BRKa.N), which holds a 10 percent stake in the airline.Shares of American Airlines rose more than 5 percent in pre-market trade after it disclosed the potential investment. The Qatar Airways chief executive, Akbar al-Baker, approached the American Airlines chief, Doug Parker, about the possible purchase.

American Airlines is not thrilled about Qatar Airways' desire to acquire a 10% stake in the US airline.

The CEO ended the letter, attempting to reassure investors and employees by explaining that even if Qatar does decide to invest, the latter's investment will not be enough to influence American's management or strategy. The company's certificate of incorporation "prohibits anyone from acquiring 4.75% or more of the company's outstanding stock without advance approval from the board following a written request", American pointed out.

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. Qatar said it was seeking a "passive position in the company with no involvement in management, operations or governance". "Qatar Airways will make all necessary regulatory filings at the appropriate time", an airline statement said.

The national carrier in collaboration with the Qatar Investment Authority is also planning to submit application to authorities in India to start a short-haul airline there with a fleet of 100 narrow-body planes.

American and Qatar are already members of the Oneworld marketing alliance, which allows passengers to earn and redeem points on each other's flights. The two airline CEOs have spoken, American said in a Securities and Exchange Commission filing. Also, VP Derek J. Kerr sold 104,223 shares of American Airlines Group stock in a transaction on Friday, June 2nd.

President Donald Trump has accused Qatar, home to a massive and strategic USA military base, of funding terrorism.

Qatar was one of the airlines affected by a USA ban on large electronic devices in aircraft cabins and the small Gulf state now faces economic sanctions by neighbouring Arab states amid allegations of links to terrorist groups.

The Middle East airlines have also moved into overseas routes that had previously been important to their United States competitors.

In 2015, Qatar Airways took a stake in British Airways' parent International Airlines Group.

Foreign ownership of USA airlines is restricted at 24.9 percent of voting shares under federal law. And in December it announced a 10 percent stake in Chile's LATAM Airlines Group, acquired for $608m.

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