Bid drew angry response from American Airlines as row over large state subsidies paid by Gulf states to their carriers continues
In a shock move, Qatar Airways is seeking as much as a 10 percent stake in American Airlines despite an ongoing economic and transport blockade by its Middle Eastern neighbours.
The surprise investment push by Qatar Airways was disclosed by American Airlines in a securities filing Thursday saying the Qatari company planned to buy at least $808 million in American shares.
In addition, Qatar Airways's chief executive told his counterpart at American that the carrier sought a stake of about 10 percent.
The outreach drew a frosty response from the US carrier, which said the intended purchase "was not solicited by American Airlines and would in no way change the Company's Board composition, governance, management or strategic direction."
American's bylaws require board approval to stakes of 4.75 percent or more. Qatar Airways said it would not exceed this level without board approval and would "make all necessary regulatory filings."
"Qatar Airways sees a strong investment opportunity in American Airlines," the company said in a statement.
"Qatar Airways believes in American Airlines' fundamentals and intends to build a passive position in the company with no involvement in management, operations or governance."
The move comes after Saudi Arabia, Bahrain, Egypt and the United Arab Emirates severed ties with Qatar over its alleged support for extremist groups and Iran. The countries have suspended all flights to and from Qatar.
Qatar's government denies the allegations and deems the blockage an "illegal act".
The blockading nations have barred the airline from airspace surrounding Qatar, and so the airline is assuming additional costs by rerouting flights through Iran and Turkey while avoiding Saudi Arabia, Bahrain and the United Arab Emirates.
Qatar Airways has downplayed the impact of the dispute on its business, saying on June 14 that the "vast majority" of its network was unaffected. But analysts have warned the profitable carrier could take a hit should the diplomatic crisis drag out.
At the Paris Air Show this week, Qatar Airways was named the world's top airline for passenger service by Skytrax, a closely-watched industry prize.
Akbar al-Baker, the airline's outspoken chief executive, used the occasion to blast Qatar's regional rivals.
"At these difficult times of illegal bans on flights out of my country by big bullies, this is an award not to me, not to my airline, but to my country," he said.
American has had its differences with Qatar Airways, among other Middle Eastern carriers, over state subsidies the US air travel industry says violate international agreements.
American chief executive Doug Parker has joined an effort with the leaders of Delta Air Lines and United Airlines to urge a crackdown by President Donald Trump on an alleged $50 billion in state subsidies to Qatar Airways and two other state-backed Middle East carriers that they argue allows the airlines to illegally compete in the US market.
Parker alluded to the controversy in a letter to employees Thursday, which adopted a skeptical tone toward Qatar's motives.
"While anyone can purchase our shares in the open market, we aren't particularly excited about Qatar's outreach, and we find it puzzling given our extremely public stance on the illegal subsidies that Qatar, Emirates and Etihad have all received over the years from their governments," Parker said.
"If anything, this development strengthens our resolve to ensure the US government enforces its trade agreements regarding fair competition with Gulf carriers, because we must make it crystal clear that no minority investment in American will ever dissuade us from doing what is right for our team members, our customers and all of our shareholders."
President Trump's attempts to limit immigration and the use of laptop on flights from some Muslim countries has also led to a drop in demand for travel from the Gulf to the US.
Qatar Airways already holds stakes in other foreign carriers, including a large holding in International Consolidated Airlines Group, the parent of British Airways.
Andrew Bishop, deputy director of research risk consultancy Eurasia Group, said Qatar Airways's approach was consistent with actions by the Qatar Investment Authority, whose stakes in German automaker Volkswagen, Russia's Rosneft and China's Agricultural Bank appear aimed at helping the country's diplomatic efforts.
"It's part of a longstanding strategy by Qatar to essentially buy into foreign alliances by investing in a range of countries whose political support it then expects in exchange, at least tacitly," Bishop said, adding it was a "risky gamble" because of the effort could be overshadowed by the "Open Skies" controversy.
Earlier this week, Qatar also announced a $30 billion restructuring of the Qatar Investment Authority, its sovereign wealth fund to improve its efficiency and oversight.