Qatar Airways eyes investment in American Airlines
- Author: Darren Santiago Jun 25, 2017,
Jun 25, 2017, 1:12
American Airline's shares soared after the firm said it had received an unsolicited offer from Qatar Airways to buy 10 per cent of its stock. Operations at Qatar Airways were disrupted after four Arab nations cut diplomatic and economic ties with Qatar this month in the worst diplomatic crisis in the region in years.Separately, American, United Continental Holdings Inc, and Delta Air Lines have pressed the US government to take action to curb USA flights by Qatar Airways and rival Gulf carrier's Emirates Airline [EMIRA.UL] and Etihad Airways.
"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 statement said.
American Airlines also noted that foreign ownership laws limited the total percentage of foreign voting interest in a USA company to 24.9 percent.
In an apparent response to this, Qatar Airways subsequently issued a statement saying it planned to make an initial investment of up to 4.75% and would not exceed that without prior consent of the American board. Qatar has submitted a filing under the Hart-Scott-Rodino Act related to the intended investment.
The disclosure also stated that Qatar Airways' CEO had approached the head of American and the two have had a conversation about the intended purchase.
The announcement comes months after Warren Buffett's Berkshire Hathaway (BRKB) has built up stakes in the top USA airlines. Also, VP Derek J. Kerr sold 104,223 shares of American Airlines Group stock in a transaction on Friday, June 2nd.
Qatar Airways has been under pressure back home after being blocked by its neighbors Saudi Arabia, the UAE and Bahrain over a political dispute.
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The US airline's Nasdaq-listed shares traded more than five per cent higher in pre-market trading.
The U.S. airlines accuse Qatar, Emirates and Etihad Airways of receiving massive subsidies from the governments that own them, in violation of so-called open-skies aviation treaties.
The U.S. carriers want President Trump's administration to review the Open Skies agreements that allow the Gulf carriers to fly freely from the United Arab Emirates and Qatar to any U.S. destination. But the U.S. airline hasn't changed its stance on the subsidies dispute.
President Donald Trump has accused Qatar, home to a massive and strategic USA military base, of funding terrorism.
In addition to being voted "Best Airline" by travellers from around the world, Qatar's national carrier also won a raft of other major awards at the ceremony, including "Best Airline in the Middle East", "World's Best Business Class" and "World's Best First Class Airline" lounge.
The most likely choices would be United Continental Holdings Inc.
Both Qatar Airways and American Airlines are members of the group - which promotes coordination among its members to ease travel pains for global fliers. And in December it announced a 10 percent stake in Chile's Latam Airlines Group for $608 million.