Qatar Airways makes unsolicited move to acquire 10% of American Airlines

American Airlines has announced that Qatar Airways is looking to acquire a 10% stake in the world’s largest carrier, though the board would have to approve it in advance if it is to progress. Currently the American carrier has made it abundantly clear that its bylaws prohibit “anyone from acquiring 4.75% or more of the company’s outstanding stock without advance approval from the Board following a written request … . The Board has not received any such request.”
American said in a federal filing that the rapidly growing Middle East carrier made it clear of its “intention to make a significant investment in American Airlines” by a purchase of common stock which “would be made on the open market.”
American’s filing indicated that Qatar Airways is aiming to purchase approximately $81 million of American Airlines common stock, adding such a move would be “subject to review by the Antitrust Division of the United States Department of Justice.” In addition, American Airlines said Qatar Airways’ CEO approached its own CEO to reveal an interest by Qatar Airways to acquire an approximate 10% stake in the American carrier. Currently, U.S. law limits foreign interests purchasing no more than 24.9% of any U.S. airline.
American CEO Doug Parker commented that: “While anyone can purchase our shares in the open market, we aren’t particularly excited about Qatar’s outreach, and we find it puzzling given our extremely public stance on the illegal subsidies that Qatar, Emirates and Etihad have all received over the years from their governments. We remain committed to that effort, and we will remain so even with this potential investment.”
The move by Qatar Airways is also a curious one considering that along with fellow U.S. carriers Delta and United, American have vociferously opposed Qatar Airways, along with Emirates and Etihad, claiming that they are in breach of the ‘Open Skies’ agreements through being recipients of respective government subsidies.
In its filing, American has made it clear that the potential deal “does not alter American Airlines’ conviction on the need to enforce the Open Skies agreements with the United Arab Emirates and the nation of Qatar and ensure fair competition with Gulf carriers, including Qatar Airways. American Airlines continues to believe that the President and his administration will stand up to foreign governments to end massive carrier subsidies that threaten the U.S. aviation industry and that threaten American jobs.”