Qatar Airways had previously announced their intention to invest in American AIrlines. This came soon before their CEO mentioned that American flight attendants were “grandmothers”. The airline had still voiced interest in investing in American after American cut ties with Qatar Airways and Etihad last month. It seems CEO al-Baker has a had change of heart. Qatar Airways will no longer invest in American.
What the….?
Qatar Airways made an announcement today saying that they will not invest in American. They cite that the airline’s financial results make it not worthwhile for them to invest. The press release continues to say that Qatar Airways will continue to seek partners in the region that are good investments. This is both surprising and unsurprising. If Qatar Airways had bought an investment in American, it would have been met very hostily by many members of the airline. Yet, Qatar is still looking to invest.
Is the Investment that Bad?
American Airlines (AAL stock ticker) has been trading near a 52-week high before the announcement. After Qatar announced they didn’t plan to invest, the airline went down over 1.25% in valuation. This is a small dent, but it did demonstrate that the market was looking forward to this deal happening. I still believe that American is a good investment (disclaimer, I own stock in American, and these are my own, personal opinions).
What now?
Qatar Airways is still looking at an investment partner. The only non-combative airlines in the US are jetBlue and Alaska. These airlines have not been fightin the Gulf carriers, and have cited them as beneficial. I don’t think Qatar will invest in jetBlue given their staunch partnership with Emirates. I also don’t think Alaska is a strategic investment, given their limited network. Qatar AIrways will not invest in Delta or United, given that there would be even more vehement opposition to the take over than at American. So, it will take time to see where Qatar will actually invest.
Landing Thoughts
This news comes as a disappointment to me. I really wanted Qatar to invest in American, and hopefully improve their onboard product to match theirs. I don’t see Qatar invetsing any time soon in another carriers. We will have to wait and see what will be Qatar’s new strategic move, and if American soften their stance on Qatar and Etihad. This would be the most logical step, given American has no partners in the Indian Subcontinent and the Gulf Carriers have a solid network there.
What do you think? Are you surprised by the actions taken by Qatar? Where will they invest? Will American retract their stance against Qatar and Etihad now? Let us know!
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H/T: Bloomberg
BOTH Emirates and Qatar Airways get BIG subsidies from their governments and offer unfair competition to the airlines in Europe, the USA and Canada. THAT is why American cut them off and they get NO RIGHTS in the USA.
Hi Pam! Thanks for reading,
Sorry for the late response, but I asked various professors at my university regarding the bankruptcy proceedings in the Middle East. At the moment there are none, so if the US carriers had been under ME laws, they would have disappeared. This means that although the ME3 are partially government subsidized, so are the US Big 3. I think it’s fair to say, that both sides of the argument are valid, however, the argument used by the US Big 3 is hyporcritical.
Best,
The Millennial Traveler