American Airlines CEO says Qatar’s big investment won’t end the nastiest feud in the airline industry

American Airlines CEO Doug Parker isn’t too happy about Qatar Airways’ intent to buy up to 10% his company

In a letter to employees obtained by Business Insider, Parker called the news “puzzling, at best and concerning, at worst” while assuring his team that Qatar Airways won’t be able to affect the company’s operation and strategy.

“While anyone can purchase our shares in the open market, we aren’t particularly excited about Qatar’s outreach, and we find it puzzling given our extremely public stance on the illegal subsidies that Qatar, Emirates, and Etihad have all received over the years from their governments,” Parker wrote.

Since 2015, American, Delta, and United Airlines (the US3) have been complaining about competition from three huge and fast-growing Middle East-based rivals — Emirates, Etihad, and Qatar Airways (the ME3).

According to the US3, the ME3’s growth has been fuelled by as much as $US50 billion in subsidies over the past decade, allowing them to flood the international market and threaten the job security of US aviation workers. They also say the ME3 are in violation of the Open Skies agreements that govern air travel between the US and 120 nations including the UAE and Qatar. 

During this time, the two sides have publicly alleged impropriety on the part of their rivals with some CEOs even resorting to threatening language.

Qatar Airways Airbus A380
Qatar Airways Airbus A380. Flickr/Eric Salard

Industry observers believe Qatar Airways’ investment in American is a backdoor attempt to curry favour with world’s largest airline and perhaps convince it to back off its lobbying campaign. However, at least outwardly, it seems to have had the opposite effect. 

“We will not be discouraged or dissuaded from our full-court press in Washington, D.C., to stand up to companies that are illegally subsidized by their governments,” Parker added. “And do not worry, per U.S. law, no foreign entity can own more than 25% of a U.S.airline, so there is no possibility that Qatar will be able to purchase enough of American to control or influence our Board, management or our strategy.”

However, Qatar Airways sees the equity stake in American as a good “passive” investment opportunity.

In an email statement to Business Insider, an airline spokesman wrote:

“Qatar Airways sees a strong investment opportunity in American Airlines. Qatar Airways believes in American Airlines’ fundamentals and intends to build a passive position in the company with no involvement in management, operations or governance. Qatar Airways has long considered American Airlines to be a good Oneworld Alliance partner and looks forward to continuing this relationship. Qatar Airways plans to make an initial investment of up to 4.75%. Qatar Airways will not exceed 4.75% without the prior consent of the American Airlines board. Qatar Airways will make all necessary regulatory filings at the appropriate time.”

In that regard, Parker and Qatar Airways seem to see eye-to-eye.

“Of course, it may just be that Qatar Airways views American Airlines as a solid financial investment, because of the great work you all are doing every day,” the American CEO wrote. “In that case, we would agree with them.”

Here’s American Airlines CEO Doug Parker’s letter in its entirety. 

American Airlines Doug Parker Letter by Benjamin Zhang on Scribd

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