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Qatar Airways says still keen on American stake despite escalating feud

posted on: Jul 17, 2017

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By: Bloomberg
Source: Arabian Business

Qatar Airways CEO Akbar Al Baker said the Gulf carrier is determined to purchase a stake in American Airlines Group as planned, undeterred by its alliance partner’s decision to scrap a marketing deal amid an escalating feud.

The Middle Eastern airline refiled its stock purchase to clarify queries from US regulators and will forge ahead with its proposal, Al Baker told reporters in Doha Thursday. Signaling its displeasure with the investment plans, the US carrier ended the codeshare agreement with Qatar Air, in a decision communicated through private notification on June 29.

“Once we get the OK from the regulator, we will buy the stock that we said we are going to buy,” Al Baker said.

Qatar Air’s planned purchase of a maximum 10 percent stake, disclosed last month, has come as a surprise to the Fort Worth, Texas-based company, which has accused the three major Gulf carriers of having enjoyed state subsidies to compete unfairly. The dispute is intensifying at a time Qatar Air is enduring an airspace ban imposed by its neighbors, who have accused its state-owner of funding Islamist terrorism.

The proposed investment, which could potentially make Qatar Air one of its largest shareholders, won’t change American’s “board, governance, management or strategic direction,” American Airlines said in a statement Wednesday.

Qatar Air and American are partners in the Oneworld global alliance and each counts British Airways as its closest global partner. Qatar Air owns a 20 percent stake in BA parent IAG.

The purchase of a major stake in American would mark a fourth foray into overseas ownership for Qatar Air following its IAG deal; the acquisition of a 10 percent holding in Latam Airlines Group, the biggest South American carrier; and a planned 49 percent stake in minor Italian operator Meridiana.

The Doha-based airline is “disappointed” with American’s decision to abandon the codeshare accord, Al Baker said.

“It isn’t in the right spirit of the Oneworld alliance,” Al Baker said. “But if it is any way for them to make us reduce or stop our operations to the US, we are not going to do so because we are complying with the open-skies policy.”

American said it would also end a marketing agreement with Etihad Airways, adding the terminations won’t have a significant financial impact. Etihad said it was disappointed with American’s exit from the code-sharing and rejected allegations it violated any air-transportation agreements.

The US airline had earlier scoffed at Qatar Air’s interest, prompting Al Baker to say his counterpart at American, Doug Parker, was “frightened” by the proposed investment. Al Baker then found himself in the hot seat this week after disparaging US flight attendants as “grandmothers” and boasting his own cabin crews had an average age of 26. He apologized Wednesday after a rebuke by labor unions and American, which called the remarks “both sexist and ageist.”

Hours before American announced the end of the codeshare deals, Al Baker apologised “unreservedly” for his description of US flight attendants. The Qatar Air CEO said his remarks were made at “a time of strong rivalry” with the US airlines.

Qatar Air can sustain the blockade imposed by its neighbors as long as it lasts though it has taken a toll on profits as additional operating costs pile up, Al Baker said.

The carrier is also pressing ahead with plans for a new airline in India. The Gulf carrier is working with its legal team for a filing in the country, Al Baker said, without elaborating.