State-owned Qatar Airways is attempting to buy a 10 percent stake in American Airlines, triggering U.S. antitrust oversight of deals that size.
American said in a regulatory filing Thursday that the bid was unsolicited, but that the CEOs of both airlines have spoken. Qatar submitted a filing under the Hart-Scott-Rodino Act, which is subject to review by the Justice Department’s Antitrust Division.
Earlier this month Saudi Arabia, the United Arab Emirates, Egypt and Bahrain cut ties with Qatar and blocked direct flights with the country. Qatar Airways, one of the region’s largest, also stopped its flights to the four Arab countries in response to the UAE’s Etihad, Emirates, FlyDubai, EgyptAir and Bahrain’s Gulf Air suspending flights to Qatar.
A tie-up with American could help it leverage influence with both Wall Street and, more importantly, decision-makers in Washington as Qatar’s most recognized global brand is pressed from all sides.
American and Qatar are already members of the Oneworld marketing alliance, which allows passengers to earn and redeem points on each other’s flights. An expanded partnership could make it easier for American passengers to get to smaller cities in India, and developing countries in Southeast Asia.
But American, United Airlines, and Delta Air Lines have been pushing U.S. political leaders to curtail the growth of the Middle East’s three biggest airlines, Qatar, Emirates and Etihad, saying that they are all government-owned, subsidized airlines that have an unfair advantage.
Also, the three Middle East airlines are cutting into lucrative routes overseas for U.S. 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.
Qatar has been on a global buying spree of late, mirroring a strategy followed by a smaller Gulf rival, Abu Dhabi-based Etihad Airways.
Qatar last year set up a revenue-sharing partnership with British Airways parent International Airlines Group, deepening its partnership with that company. It owns just over 20 percent of IAG, which also controls European carriers Aer Lingus, Iberia and Vueling.
In July Qatar Airways announced a deal to buy a 49 percent stake in Meridiana, Italy’s second-biggest carrier. And in December it announced a 10 percent stake in Chile’s LATAM Airlines Group, acquired for $608 million.
Qatar plans to buy at least $808 million in common stock of American Airlines. American’s shares are listed on the Nasdaq, and the airline said that Qatar plans to make its purchases on the open market.
American’s certificate of incorporation restricts anyone from buying 4.75 percent or more of its shares without advanced board approval following a written request. American says it hasn’t received such a request.
The U.S. prevents foreign ownership of airlines to less than 25 percent.
American said that Qatar’s proposed investment wouldn’t change its board makeup, governance, management or strategic direction.
Shares of American Airlines Group Inc. rose 3 percent at the opening bell.