Qatar Airways Intends To Take 10% Stake In American Airlines

Qatar Airways today announced that it would like to take 10% stake in American Airlines and intends to increase its ownership to 4.75% (the highest allowed without AA’s boards approval).

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Qatar Airways already owns 20% of IAG (the parent of British Airways, Iberia, Aer Lingus and Vueling) and mist recently purchased 10% of LATAM.

You can access Reuters piece of this intended purchase here of which below is an excerpt:

Qatar Airways said in a statement that it sees a “strong investment opportunity” in American and that it “intends to build a passive position in the company with no involvement in management, operations or governance.”

Qatar Airways plans to make an initial investment of up to 4.75 percent. Qatar Airways will not exceed 4.75 percent without prior consent of the American Airlines board. Qatar Airways will make all necessary regulatory filings at the appropriate time.”

American, in its filing, noted potential obstacles to Qatar’s plan to acquire the stake. American said its rules prohibit “anyone from acquiring 4.75 percent or more of the company’s outstanding stock without advance approval from the board,” and said it had received no request from Qatar for such approval. Further, American said, “there are foreign ownership laws that limit the total percentage of foreign voting interest to 24.9 percent.”

Conclusion

Seems that American Airlines prefers to choose its owners as it has rules on its books that shareholder cannot own more than 4.75% without getting prior approval from the board. This is called capitalism?

Qatar Airways has bought stakes on fellow Oneworld Airlines and formed somewhat closer ties with them. This is also an effective way silence any criticism towards the ME3. How could you criticize your major shareholder?

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