Qatar Airways’ move to buy 10% stake surprises American Airlines

Jun 23, 2017: A regulatory filing by American Airlines announcing the intention of the Middle East Carrier Qatar Airways to acquire 10 percent stake from the open market surprised the aviation industry. This grabbed the headlines of most of the western newspapers. And one of them quoted American Airlines CEO Doug Parker saying Qatar Airways’ move as “puzzling”.

According to the official statement from the state-owned carrier from the Middle East, “Qatar Airways sees a strong investment opportunity in American Airlines. 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. Qatar Airways has long considered American Airlines to be a good Oneworld Alliance partner and looks forward to continuing this relationship. Qatar Airways plans to make an initial investment of up to 4.75 percent. Qatar Airways will make all necessary regulatory filings at the appropriate time.

The American Airlines has clarified that the move of stake buy by Qatar Airways was unsolicited, but admitted that the CEOs of both airlines have spoken in this regard. The regulatory filing by American Airlines says, "The proposed investment by Qatar Airways was not solicited by American Airlines and would in no way change the Company's Board composition, governance, management or strategic direction."

Qatar Airlines plans to invest $808 million in acquiring the stock of American Airlines from the open market. American Airlines' shares are listed on the Nasdaq. The US limits foreign ownership of airlines to less than 25 percent. Any investment in American Airlines beyond 4.75 percent requires approvals from the board. Qatar initially would look at 4.75 percent ($1.1 billion) and raise it to 10 percent.

The said move by Qatar also astonished the aviation experts as there was a long pending feud between the US carriers and the Middle East carriers over unfair subsidies from their governments. Qatar Airways was started as regional airlines and has currently operates to 150 destinations in the world.