Qatar Airways interested in buying 10 percent stake in American Airlines

By Alexander Cornwell

(Reuters) - American Airlines Group Inc said on Thursday that Qatar Airways, the Gulf country's state-owned airline, had expressed interest in buying as much as a 10 percent stake worth at least $808 million in the U.S. airline.

The potential investment comes against a background of diplomatic and competitive turbulence for Qatar Airways, its home country and U.S. airlines. Operations at Qatar Airways were disrupted after four Arab nations cut diplomatic and economic ties with Qatar this month in the worst diplomatic crisis in the region in years.

Separately, American, United Continental Holdings Inc, and Delta Air Lines have pressed the U.S. government to take action to curb U.S. flights by Qatar Airways and rival Gulf carrier's Emirates Airline and Etihad Airways. The U.S. carriers charge that their Gulf rivals have received billions of dollars in unfair state subsidies, allegations the Gulf carriers deny.

Investors cheered news of Qatar's potential investment in American, sending shares of the U.S. carrier up more than five percent in pre-market trading. American shares were up about 2 percent in regular morning trade.

Qatar Airways indicated its interest in buying a stake in American on the open market, American said in a regulatory filing. (http://bit.ly/2tRVFlK)

Qatar Airways said in a statement that it sees a "strong investment opportunity" in American and that it "intends to build a passive position in the company with no involvement in management, operations or governance."

"Qatar Airways plans to make an initial investment of up to 4.75 percent. Qatar Airways will not exceed 4.75 percent without prior consent of the American Airlines board. Qatar Airways will make all necessary regulatory filings at the appropriate time."

American Airlines declined comment and it was not clear how American's board or management would respond to Qatar's potential investment.

American, in its filing, noted potential obstacles to Qatar's plan to acquire the stake. American said its rules prohibit "anyone from acquiring 4.75 percent or more of the company's outstanding stock without advance approval from the board," and said it had received no request from Qatar for such approval. Further, American said, "there are foreign ownership laws that limit the total percentage of foreign voting interest to 24.9 percent."

Qatar Airways, the Middle East's second biggest airline, also owns 20 percent of British Airways-owner International Airlines Group (IAG) and 10 percent of South America's LATAM.

Qatar Airways, American Airlines, IAG's British Airways, Iberia and LATAM, are all members of the oneworld airline alliance.

Qatar Airways Chief Executive Akbar al-Baker has said the investments so far were purely financial, though he has looked for opportunities to cut costs or expand service with the oneworld alliance airlines in which it owns stakes.

Qatar Airways and British Airways have a revenue sharing partnership between their respective hubs in Doha and London, and Qatar Airways plans to launch flights to LATAM's base in Santiago, Chile.

The crisis has seen Saudi Arabia, the United Arab Emirates, Bahrain and Egypt close their airspace to Qatar Airways, forcing it to cut flights to those countries, fly longer routes and thereby adding costs.

Al-Baker, who has been highly critical of the blocking of airspace, has said Qatar Airways would use the aircraft used to fly to those countries for fast-track expansion plans elsewhere.

(Reporting by Alexander Cornwell in Dubai, Rachit Vats in Bengaluru and Alana Wise in New York; Editing by Sai Sachin Ravikumar, Bernard Orr)