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American Airlines (AAL) Climbs Higher as Qatar Airways Looks to Buy 10% Stake

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On Thursday, shares of American Airlines (AAL - Free Report) are moving higher, up about 1.08% in late-morning trading after the company said it had recently received an unsolicited offer from Qatar Airways, the Middle Eastern country’s state-owned airline, to buy as much as a 10% stake. AAL stock had gained about 6% in premarket trading.

In a regulatory filing released by American, Qatar’s proposed purchase of 10% of the airline’s shares equals a roughly $808 million investment. This interest in American followed a conversation between the two companies’ CEOs, a discussion initiated by Akbar Al Baker, the chief executive of Qatar.

Qatar has filed under the Hart-Scott-Rodino (HSR) Act, and submitted the appropriate filings; the company said it has plans to make its stock purchase on the open market.

“The proposed investment by Qatar Airways was not solicited by American Airlines and would in no way change the company's board composition, governance, management or strategic direction,” said American. The company stated that it will respond to the offer “in due course.”

The U.S. airline giant also added in its regulatory filing that anyone who intends to buy over 4.75% of the company must gain board approval, but it has yet to receive any such request. And, American noted that there are foreign ownership laws that limit the percentage amount of foreign voting interest to 24.9%.

CNBC notes that this offer is somewhat shocking, as American’s CEO Doug Parker has not shied away from criticizing Gulf carriers like Qatar in the past, “arguing they receive subsidies [that] have potentially hurt U.S. carriers as a result.”

But American made sure to assure investors of its commitment to fair competition, saying the offer “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,” said the airline.

AAL is currently a #3 (Hold) on the Zacks Rank, with a VGM score of ‘A.’ Shares of American have gained about 4.6% year-to-date.

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