10% of Amer­i­can Air­lines sought

Los Angeles Times - - BUSINESS BEAT - As­so­ci­ated press

State-owned Qatar Air­ways is at­tempt­ing to buy a 10% 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 chief ex­ec­u­tives of both air­lines have spo­ken. Qatar sub­mit­ted a fil­ing un­der the Hart-Scot­tRodino 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 f lights to the four Arab coun­tries in re­sponse to the UAE’s Eti­had, Emi­rates, Fly­Dubai, Egyp­tAir and Bahrain’s Gulf Air sus­pend­ing flights to Qatar.

Amer­i­can and Qatar are al­ready mem­bers of the Oneworld mar­ket­ing al­liance, which en­ables pas­sen­gers to earn and re­deem points on one another’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 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% 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%.

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