If Qatar Airways Buys Into American, Who’s Next?

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American Airlines Group Inc. (NASDAQ: AAL) announced Thursday morning in a filing with the U.S. Securities and Exchange Commission that Qatar Airways has notified the U.S. carrier of the Qatari company’s intention to make a “significant investment” in American through open market purchases of American’s stock.

Qatar Airways is one of the three major Middle East carriers, all backed by their governments and, as a consequence, equipped with very deep pockets. Will either of the others follow suit?

Qatar Airways is owned by the government of Qatar, whose sovereign wealth fund of some $335 billion as of June 2016 could easily manage the announced purchase at least $808 million in American Airlines stock, with a further intention of acquiring a stake of about 10%. At Wednesday’s closing price that 10% stake in American would cost about $2.23 billion.

Emirates is owned by the Investment Corporation of Dubai, the sovereign wealth fund of the United Arab Emirates (UAE), which posted a balance of $201 billion in June of last year.

Etihad Airlines is wholly owned by the government of Dubai, the largest city in the UAE, with its own sovereign wealth fund of $792 billion.

All three airlines have been charged with unfair competition by U.S. carriers including American Airlines, related to their government ownership. But if Qatar Airways successfully acquires a 10% stake in American, the other Gulf carriers could make similar plays for other U.S. carriers.

The most likely choices would be United Continental Holdings Inc. (NYSE: UAL), whose market cap is roughly equal to American’s international routes. Delta Air Lines Co. (NYSE: DAL), the most vocal in its condemnation of alleged government subsidies to the Gulf carriers, has a market cap of around $38 billion and also flies internationally.

Southwest Airlines Co. (NYSE: LUV) has only a limited number of international flights and all are within the western hemisphere, making it a poor choice as a feeder airline to Europe or Asia through the Middle East.

On Tuesday, Qatar Airways was named the world’s best airline by Skytrax, unseating Emirates, which won the honor last year. Saudi Arabia, the UAE and Bahrain recently severed diplomatic ties with Qatar, halting air, sea and land traffic due to Qatar’s support for terrorist groups and the country’s ties to Iran.

Qatar Airways’ outspoken CEO, Akbar Al Baker, has said he expects the United States to intervene quickly to resolve the dispute, but seeking a 10% stake in an airline named “American” is not likely to sit well with the current administration in Washington. American’s articles of incorporation also prohibit a single owner from holding more than 4.75% of the outstanding shares without the board’s prior approval. Laws on foreign ownership also limit the total percentage of foreign voting interest to 24.9%, according to American Airlines’ SEC filing. Why the airline and its CEO chose now to announce their intention to invest in a U.S. carrier is something of a mystery.

Any carrier with a large number of domestic routes that could feed passengers to the Gulf carriers’ international routes is a potential target. For example, an offer by Qatar Airways or either of the other two big Gulf carriers for a Europe-based airline like Ryanair Holdings PLC (NYSE: RYAAY) or EasyJet would seem to face less opposition than a play for a piece of American Airlines and may make more sense economically as well.

Shares of American Airlines traded up as much as 4.4% early Thursday and were seen most recently up about 2% at $49.37. The stock’s 52-week range is $24.85 to $51.95.