According to latest reports, American Airlines Group (NASDAQ:AAL) has received an “unsolicited” bid from Qatar Airways which wants to take over 10% of the US carrier’s stake.
American Airlines said in a statement that Qatar wished-for acquiring at least $808m of its shares and it would respond “in due course”.
Shares of the largest airline in the world, initially surged 5%, but dropped to a 1.1% rise by the end of trading.
Meanwhile Qatar Airways said in a separate statement that it sees American as a decent investment opportunity and would not participate in management, operations or governance.
“Qatar Airways believes in American Airlines’ fundamentals,” the company said.
Qatar Airways took a 10% share in International Airlines Group (IAG), the owner of British Airways and Iberia. Then in July 2015 it surged its share to 20%, becoming IAG’s biggest shareholder.
However recently, Saudi Arabia, Egypt, Bahrain, the United Arab Emirates, Libya, Yemen and the Maldives cut diplomatic ties with Qatar. With that all these Arab countries said to cut flights in and out of Qatar, not just that they also announced to close their airspace to the country’s flag carrier, Qatar Airways.
Furthermore US based firms, including American Airlines, have also pushed the White House to take step against Qatar Airways and other Gulf airlines, which they say receive excessive government subsidies.
Analysts think Qatar Airways may be using this investment to help reduce those objections. The company may also be looking to reinforce Qatar’s relationship with the US, which has appeared tentative amid the diplomatic dispute in the Gulf.
This won’t be the very first joint venture between the two giants, if the deal goes through. American Airlines (AAL) and Qatar Airways are already allies through the Oneworld. This investment could only make this relationship stronger, however it won’t have massive effect on consumers, according to analysts.