Sorry for the long article, I don't have a subscription to the Dallas Biz Journal.
Qatar Airways to start amassing American Airlines shares 'soon,' CEO says
Qatar Airways will move ahead with its plans to take a big stake in American Airlines despite protests from the Fort Worth-based company’s management and pilots, the state-owned carrier’s chief executive told reporters on Thursday in Ireland.
Qatar notified American Airlines (Nasdaq: AAL) last month that it wants to buy up to 10 percent of its shares. A purchase of more than 4.75 percent requires approval of American's board.
CEO
Akbar al-Baker, who was in Dublin launching a new Qatar Airways route, said the carrier will
begin buying American’s shares on the open market “soon.”Qatar does not intend to buy more than 10 percent of American,
al Baker said.
American’s stock jumped 2.5 percent to $52.55 in early afternoon trading.
If Qatar Airways succeeds in amassing 10 percent of the world’s largest airline's stock, it will be one of the four biggest owners of American and essentially match the recent stake taken by investor extraordinaire
Warren Buffett’s Berkshire Hathaway Inc.
The unsolicited move to buy heavily into American would make Qatar a major owner at a time when American and other U.S. carriers are fighting expansion by Qatar and two other Middle Eastern carriers. The U.S. airlines claim the Middle Eastern carriers receive state subsidies that violate trade agreements. The Middle Eastern carriers deny that.
American Airlines Chairman and CEO
Doug Parker last month called the proposed share buy-up by Qatar “puzzling,” and added in a memo to employees, “we aren’t particularly excited about Qatar’s outreach.”
The United States is an important market for Qatar Airways,
accounting for 16 percent of its total traffic,
Corrine Png, founder and CEO of research firm Crucial Perspective, told the Dallas Business Journal.
With an ambitious planned capacity expansion of over 20 percent this year and next, Qatar Airways needs to increase its international traffic feed and broaden its network reach, especially after the recent Saudi-led blockade, Png said. Partnering with a U.S. carrier would help facilitate this, she said.
On June 5, Saudi Arabia, the United Arab Emirates, Bahrain and Egypt announced they were severing relations with Qatar, accusing it of supporting terrorism. Qatar has repeatedly denied the allegations.
Al-Baker said Thursday that American's CEO
Doug Parker told him last month that he opposes Qatar's planned investment and that he would not recommend that the board approve the purchase of a stake worth more than 4.75 percent,
Reuters reported from Dublin.
"He categorically told us that he was not interested, that he would not suggest to his board to allow us. However, I told him we can still take 4.75 percent and we will do that,"
al Baker said.
"Maybe once we have taken that 4.75 and they see the value that Qatar Airways brings to the table for them that they will reconsider," he said.
He said he does not want to soften American Airlines management’s lobbying to curb U.S. flights by Qatar Airways and rival Gulf carriers Emirates and Etihad Airways, according to Reuters. The U.S. carriers contend that the Gulf carriers have received billions of dollars in unfair state subsidies.
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