Owned Qatar Airways seeks 10 pct stake in American

Qatar Airways

Qatar Airways

United States stocks were flat early Thursday as oil prices stabilized while airlines got a boost on news that Qatar Airways is seeking a stake in American Airlines.

Qatar Airways, its Middle Eastern business pressured by a diplomatic row with neighbors, is seeking as much as a 10 percent stake in American Airlines, the United States carrier said Thursday.

But American, United Airlines, and Delta Air Lines have been pushing US 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.

One of the region's largest airlines, Qatar Airways also owns 20% of British Airways-owner International Airlines Group (IAG) and 10% of South America's LATAM. U.S. stocks were flat early today as oil prices stabilised while airlines got a boost on news that Qatar Airways is seeking a stake in American Airlines.

Per the US' foreign ownership laws, Qatar Airways would ultimately be capped at owning 24.9% of any airline in the country. Any such purchase is subject to the approval of the American Airlines board, as well as to an antitrust review of the Department of Justice.

American and Qatar are already members of the oneworld alliance of global airlines, which lets passengers earn and redeem points on each other's flights.

American said in the securities filing that the proposed transaction "does not alter" its conviction that the federal government must enforce its Open Skies deal with the Qatari government to "ensure fair competition".

The initial investment will be worth at least $808 million.

Qatar Airways is getting squeezed in a dispute between its national government and neighboring countries led by Saudi Arabia, which accuse Qatar of supporting Islamic extremists. It recently announced plans to launch an airline in fast-growing India.

Airlines buying a stake in other carriers is not unusual.

The US airline's Nasdaq-listed shares traded more than five per cent higher in pre-market trading.

2017 marks Qatar Airways' fourth win for Airline of the Year, an honor previously bestowed in 2011, 2012 and 2015.

The CEO ended the letter by assuaging investors and employees by explaining that even if Qatar decides to invest, their investment will not be enough to influence American's management or strategy.

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