Qatar applies to join Airlines for America

Qatar applies to join Airlines for America

With the business news of Paris wrapping up, people were expecting the big stories to be wrapping up for the week, Qatar Airways had different ideas.

In a move that few saw, Qatar Airways has approached American Airlines about buying $808 million of stock, or roughly 10% of the company.

Qatar plans to first buy a 4.75% stake and then ask American Airlines’ board to allow it to buy more.

Given American and Qatar’s chequered past it’s hard to look at this as just a simple transaction.

American Airlines is a key member of the Partnership for Open and Fair Skies coalition along with Delta and United Airlines. The Partnership’s mission statement is to “level the playing field under the Open Skies agreements with Qatar and the UAE.”

The coalition wants the U.S to address the “unfair” government subsidies that Gulf airlines receive, giving them a boost on key routes under the U.S Open Skies policy. Surprisingly, Qatar Airways is one of the biggest targets of the partnership’s ire.

Qatar may want to discourage this. Doug Parker, CEO of American seems to be concerned about this as well. In an email to staff he wrote: “We will not be discouraged or dissuaded from our full court press in Washington, DC., to stand up to companies that are illegally subsidized by their governments.”

The proposed investment also comes at a time when Qatar is looking for political allies. Although it is hard to see how having a stake in one of the big four US carriers would really help.

Qatar already owns 15% of IAG and Parker does hedge his bets saying that it could just be another investment.

Alex Baldwin
By Alex Baldwin June 23, 2017 16:34