Airline Sector In Focus As Qatar Airways Wants To Invest In American Airlines

Airline stocks soared in pre-market trading Thursday on news that Qatar Airways’ intends to acquire at least a 10-percent, $808 million stake in American Airlines Group Inc AAL.

Qatar Airways submitted a filing under the Hart-Scott-Rodino Antitrust Improvements Act, which is mandatory for purchases of more than $81 million, according to an 8K filed by American Airlines. The investment is subject to review by the United States Department of Justice Antitrust Division, and American Airlines will submit required follow-up documents.

Although Qatar Airways offered “unsolicited notice” alerting to its intended investment and the companies’ CEOs have discussed the transaction, the American Airlines board has not yet been formally approached with the matter. The directors must receive a written request and grant subsequent approval of the deal before the transaction is legitimized.

If approved, Qatar Airways’ influence will be limited by U.S. foreign ownership laws capping foreign voting interest at 24.9 percent. American Airlines also confirmed that the proposed investment would not change its strategic direction or management.

“It also does not alter American Airlines’ conviction on the need to enforce the Open Skies agreements with the United Arab Emirates and the nation of Qatar and ensure fair competition with Gulf carriers, including Qatar Airways,” the firm’s 8K read. “American Airlines continues to believe that the President and his administration will stand up to foreign governments to end massive carrier subsidies that threaten the U.S. aviation industry and that threaten American jobs.”

At time of publication, American Airlines was trading up 5.5 percent to $50.90.

Meanwhile, Delta Air Lines, Inc. DAL was up 1.4 percent, United Continental Holdings Inc UAL 1.8 percent, Southwest Airlines Co LUV 1.6 percent and JetBlue Airways Corporation JBLU up 1.2 percent.