Qatar Airways Is Not Investing In American After All

In late June, Qatar Airways announced their intentions to buy up to a 10% stake in American Airlines. Per a filing at the time, Qatar first wanted to acquire an $808 million stake (~4%) in American, and was considering increasing that at a later point. While I’d usually call Qatar’s bluffs, the airline has purchased a significant stake in IAG, the parent company of British Airways, so this move didn’t seem that unusual.

Not surprisingly, American’s CEO claimed he wasn’t “particularly excited” about this news, and described the news for many as “puzzling, at best, and concerning, at worst.” This is probably largely due to the dispute between US carriers and Gulf carriers, and really he had to say that, give the (deceptive) smear campaign that the US carriers are running against the Gulf carriers.

Well, it looks like this is now off the table. Qatar Airways has announced that they won’t be proceeding with their investment in American Airlines. Per a statement from Qatar Airways:

Qatar Airways has taken the decision not to proceed with its proposed passive financial investment in American Airlines. Further review of the proposed financial investment, taking into account the latest public disclosure of American Airlines, has demonstrated that the investment no longer meets our objectives. Qatar Airways will continue to investigate alternative investment opportunities in the United States of America and elsewhere that do meet our objectives. Qatar Airways will continue to seek opportunities to invest in global aviation to support the airline’s goal to offer the best possible travel experience for its customers.

It’s interesting that they say this “investment no longer meets [their] objectives.” Officially I assume their objective in investing in a company would be to get a return on their investment, rather than any ulterior motives.

However, reading between the lines I suspect another objective of the investment was to try and have some soft power over American, get them to cooperate better, etc. I’m not sure if anything went on behind the scenes to make them realize that’s not happening, or what. It’s also entirely possible that Qatar is just in a bad situation right now with too much going on, so they don’t want to spend nearly a billion dollars on this right now.

So we don’t really know why Qatar Airways changed their mind, or just how serious they were at the beginning, rather than just playing a big mind game.

(Tip of the hat to The Points Guy)

Comments

  1. This is so sad. Qatar’s investment could have assisted American Airlines in their goal “Going for Great!”

    I was so looking forward to Qatar and American cooperating more fully with this share purchase including stronger connecting flight integration at PHL from American to the Qatar flight.

  2. American has outdone itself in stupidity lately, getting drawn into this fight against the ME3 that is really only in the interests of Delta, therefore ending their codeshares with QR and EY, and proceeding with Basic Economy across the system even though both they and United admitted in their earnings calls that American is gaining market share to date by NOT introducing it.

    Sad but not surprising to see Qatar pull their investment. While I know AA didn’t welcome the Qatari cash, I was hoping it would start a process to usher in more cooperation between the two in the long run (and hopefully inject improved management and service culture into AA).

    Guess we just see more “copy Delta at all costs” instead.

  3. Aw, and I was really hoping this would mean AA would actually be a good airline! A man can dream…

  4. They figured spending almost 300 million to get a brazilian footballer from Spain to France was a better deal?

  5. Good! QR needs to stick to their knitting for the time being. They have much bigger fish to fry.

  6. @Petri, they (“Qatar Sports Investment”) actually pay 800m euros or almost 1b usd for Neymar!

    The transfer fee is only a part of that. On top of that, Neymar will earn 450m euros for 5 years, his father will earn 100 million as an adviser and presumably for helping to broker the deal. Plus a few smaller items that I’ve forgotten already.

    These middle east countries are certainly not very wise investing their oil wealth. Especially considering that the the advancing electrification of the car fleet combined with massive buildout of wind and solar power plants at grid parity cost will steamroll them.

    Imagine, Etihad/ UAE also wasted 3 billion funding ongoing operating losses at Air Berlin and Alitalia

  7. @Chris K – how true when you say:

    These middle east countries are certainly not very wise investing their oil wealth. Especially considering that the the advancing electrification of the car fleet combined with massive buildout of wind and solar power plants at grid parity cost will steamroll them. Imagine, Etihad/ UAE also wasted 3 billion funding ongoing operating losses at Air Berlin and Alitalia.

    And don’t forget to mention their antiquated sewage systems.

    Easier to waste oil money on soccer and Royal Family fun.

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