Qatar Airways still pursuing American Airlines stake after code share hitch

(Reuters) - Qatar Airways said it will go ahead with plans to buy a stake in American Airlines Inc AAL.O even though the U.S. carrier is ending their code-share agreement.

Qatar Airways Chief Executive Akbar al-Baker speaks to reporters after unveiling a commemorative signing wall in support of Qatar’s Emir Sheikh Tamim Bin Hamad Al-Thani in Doha, Qata, July 13, 2017. REUTERS/Naseem Zeitoon

American announced on Wednesday that it was cancelling code-share agreements with Qatar Airways and Etihad Airways as “an extension of our stance against the illegal subsidies that these carriers receive from their governments.” Both Middle East airlines deny they are state subsidized.

American’s decision to end the agreements which allow airlines to book passengers on each other’s flights, ramps up an acrimonious dispute between U.S. carriers and Gulf competitors over competitive advantages.

Qatar Airways Chief Executive Akbar al-Baker said on Thursday he was disappointed by the decision, but it would not affect the Middle East carrier’s plans to buy up to a 10 percent stake in American, announced last month.

“Our stock purchase request and filing is going ahead as normal. We had to clarify certain questions of the regulator, which we compiled with,” al-Baker told reporters in Doha.

Qatar Airways sent a revised antitrust filing to U.S. regulators on Wednesday seeking clearance to buy up to a 10 percent stake in the U.S. carrier, according to the filing.

A stake in American would add to Qatar Airways' investment portfolio, which already includes a 20 percent stake in British Airways-owner International Airlines Group ICAG.L and 10 percent of South America's LATAM LAN.SN.

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American Airlines CEO Doug Parker, however, said in a letter to his employees last month that “We aren’t particularly excited about Qatar’s outreach” and that it was puzzling given the U.S. carrier’s very public stance on state support given to Gulf carriers.


American and other U.S. carriers have charged that state subsidies allow Qatar Airways, Etihad and Emirates [EMIRA.UL] to offer lower fares and more amenities to long-haul, international travelers.

They are pressing the United States government to curb the Middle Eastern carriers’ access to U.S. airports, and the White House is considering their request, according to government officials and airline executives who have spoken to the White House.

Al-Baker said American’s decision to end the code-share agreement was “not in the spirit of the one world alliance” and that Qatar Airways had other partners in the United States “who want to work with us.”

Qatar Airways, American Airlines, IAG’s British Airways, Iberia and LATAM are all members of the one world airline alliance.

Al-Baker previously said Qatar Airways would buy American shares on the open market before formally seeking board approval from the U.S. carrier to increase its ownership. [nL8N1JX389]

The U.S. airline’s own rules require advance approval from its board for the purchase of a stake of 4.75 percent or more.

American said on Wednesday that cancelling code-sharing agreements with Qatar Airways and Etihad would not have a material financial impact for the U.S. carrier.

Etihad, which flies to six U.S. cities, accused American of being “anti-competitive” and “anti-consumer” and said it was disappointed with the decision.

An interline relationship between Etihad and American, which allows customers from two airlines to buy connecting flights on one ticket, would remain in place to connect passengers to secondary markets, an Etihad spokeswoman said.

Reporting by David Shepardson and Alana Wise, Reporting by Tom Finn in Doha; Additional reporting by Alexander Cornwell in Dubai; Editing by Leslie Adler and Susan Fenton