Sun | Aug 20, 2017

Qatar Airways seeks 10% stake in American Airlines

Published:Sunday | June 25, 2017 | 6:00 AM
In this January 15, 2015, file photo, a new Qatar Airways Airbus A350 approaches the gate at the airport in Frankfurt, Germany. (AP Photo/Michael Probst, File)

Qatar Airways wants to buy 10 per cent of American Airlines, a move cloaked so heavily in international trade and politics that American's CEO finds it puzzling.

American has tried to convince two successive United States administrations that Qatar and two other state-owned Middle Eastern carriers get illegal subsidies from their governments. Qatar has fought back in the increasingly nasty dispute. Now Qatar is suffering because its nation is under blockade by its Arab neighbours, who have closed their airspace to the carrier.

On Thursday, Qatar Airways said it plans to buy an initial stake of up to 4.75 per cent of American's stock. American said Qatar CEO Akbar Al Baker told American CEO Doug Parker that he wants to acquire about 10 per cent of the airline's stock, which would cost about US$2.4 billion. The two men met secretly in early June at an airline-industry conference in the Mexican resort town of Cancun.

Although the two airlines are on opposite sides of a trade fight, they sell seats on each other's flights and cooperate as members of the same alliance of global carriers.

Qatar said in a statement that it hopes to continue that relationship. It said it sees a "strong investment opportunity" in American, and would be merely a passive investor with no role in American's management or operations.

American, the world's biggest airline, said Qatar's bid was unsolicited, and Parker belittled it.

"We aren't particularly excited about Qatar's outreach," the CEO wrote in a memo to American employees. He said the move was "puzzling" given American's ongoing fight over claims that Qatar, Emirates and Etihad Airways receive unfair government subsidies - a fight he vowed to keep pursuing.

"If anything, this develop-ment strengthens our resolve to ensure the U.S. government enforces its trade agreements regarding fair competition with Gulf carriers," Parker said. Earlier this month he called competition from the state-owned Persian Gulf carriers the biggest threat he has ever seen to US aviation.

Al Baker is known for brash moves and declarations. His fast-growing company has bought its way into other airlines, including the parent of British Airways, a close partner of American.

A tie-up with American Airlines Group Inc could help Qatar Airways - Qatar's most recognised global brand - gain influence with both Wall Street and decision-makers in Washington.

- AP