This past June, global air travel leader Qatar Airways announced tentative plans to invest heavily into Fort Worth-based American Airlines, the world’s largest carrier when accounting by sheer fleet size. The project would have seen Qatar buy a hefty 10 percent stake in the carrier, but a statement this week revealed that the Doha-based flag carrier will not be going through with the investment.
This past Wednesday, Qatar Airways revealed that, in response to AA’s most recent public disclosure, that the carrier was canceling the investment as it no longer aligned with Qatar’s objectives. While the exact reason for the change is unclear from Qatar’s vague, measured announcement, the decision seems to be a result of both American Airlines’ somewhat mixed financial performance this year and the complicated relationship between the two carriers. That said, AA spoke of the change amicably enough, with spokesman Matt Miller stating American respects Qatar’s change in direction. Qatar declined to issue a clarifying statement or response when contacted.
American Airlines, along with fellow United States carriers Delta and United Airlines, have previously raised opposition towards government subsidies paid to Qatar Airways, calling the payments unfair. That said, AA’s complaint came before Qatar’s June announcement, so it’s unlikely to have played a significant role in their ultimate decision. Rather, Qatar’s announcement seems to reference AA’s somewhat rocky performance in 2017.
Compared to last year’s figures, American Airlines’ sales for this past financial quarter grew to a little over 11 billion dollars, or roughly a seven percent increase. However, profits for the quarter actually fell a little over 800 million dollars, which amounts to about a 16 percent drop. Since ticket sales increased for the quarter, the reason for the loss in profits is because of escalating labor expenses. Still, financial analysts are optimistic about AA’s future, with members of the prestigious Cowen Group investment firm considering American’s financial future optimistic.
Financial concerns aside, the investment had a number of obstacles to overcome had Qatar elected to proceed. Doug Parker, CEO at American, was opposed to the deal and expressed his intention to continue pressuring the government to withdraw financial subsidies to Qatar Airways. Furthermore, AA’s board of directors is authorized to cap shareholder investments at 4.75 percent, far below Qatar’s planned 10 percent stake. While the deal with AA is finished, Qatar went on to state in Wednesday’s press release that they will search for other investment opportunities within the United States.