Qatar, Rebuffed By American Airlines, Just Bought 9.6% of Cathay Pacific

Qatar Airways tried to buy into American Airlines, a move that would have helped feed its US flights, gain favor with the administration to solve political problems with US airlines trying to shut down Open Skies, and perhaps gain political favor in resolving the blockade it faces from neighboring Gulf countries.

This strategy has served them well with their 20% stake in British Airways and Iberia parent IAG has benefited them.

However American’s CEO Doug Parker took umbrage at the move. He’s been telling his employees how much of a danger Qatar Airways is. He immediately attacked the proposed investment. And he moved to terminate American’s codesharing with Qatar.

The initial investment would have required US government clearance, and going over 4.75% ownership in the airline would have required the Board’s agreement — a tool to protect the company from losing net operating losses retained in bankruptcy but lost in the event of change of control (funny no such concerns were raised about Warren Buffet’s stake, hah). Qatar terminated its effort.

Now they’ve made a new move buying 9.6% of oneworld partner Cathay Pacific for $662 million making Qatar the third largest shareholder of the Hong Kong-based airline. Swire Group owns 45% of the carrier and Air China owns 30%.

In addition to stakes in British Airways, Iberia, and Cathay, Qatar Airways owns 10% of LATAM and 49% of Italian carrier Meridiana.

It’s not clear how this stake strategically advances Qatar’s goals, either politically or in terms of providing significant feed to their flights.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. When airlines and other entities own large stakes of other airlines, individual shareholders have little, if any say, in how an airline is run.

  2. It’s obviously nice to have unlimited cash to buy whatever you want. Kind of like being king. And since the Emir owns Qatar Airways, it is EXACTLY like that.

    The good news for the Emir is that Cathay Pacific seems like a viable business — unlike the airline investments Etihad tends to make. Cathay’s probably not going to make him any significant amount of money, but he’ll be fine. Which is probably all he needs.

  3. The ME carriers are nothing more than Marketing Tools of Middle Eastern Governments that are determined to undermine the viability of the Airlines of the World since Global Oil prices have been down for awhile. They undercut pricing in the Marketplace and the other Airlines decide to cut routes when the routes become unsustainable. If You want to connect in Dubai and Doha every Trip, have at it but don’t complain the US3 don’t fly to certain regions of the World. (Ie India, Africa, SEAsia). many of You are Clueless to What is REALLY Going On.

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