Qatar Airways has announced that it will no longer invest in American Airlines (AAL - Free Report) , reversing its decision in June to buy as much as a 10% stake. In reaction to this news, American Airlines stock closed the day at $50.45 per share, down 1.19%.
“Further review of the proposed financial investment, taking into account the latest public disclosure of American Airlines, has demonstrated that the investment no longer meets our objectives,” Qatar said in a statement.
A spokeswoman for American said there would be no elaboration on what Qatar was referring to when they said, “the latest public disclosure of American Airlines.”
Many were shocked in June when Qatar announced its interest in American Airlines. American, along with U.S. competitors Delta Air Lines (DAL - Free Report) and United Airlines (UAL - Free Report) , have lobbied the government to limit Qatar’s growth in the U.S. The U.S. carriers have argued that Qatar, along with Persian Gulf airlines Etihad and Emirates, receive unfair subsidies.
American CEO Doug Park has also maintained his criticism of Qatar despite their investment interest. “We aren’t particularly excited about Qatar’s outreach, and we find it puzzling given our extremely public stance the illegal subsidies that Qatar… receives,” he said after news broke about Qatar’s interest. “We remain committed to that effort, and we will remain so even with this potential investment.”
Qatar said it will “continue to investigate alternative investment opportunities in the United States of America and elsewhere that do meet our objectives” to develop “the best possible travel experience for its customers.”
AAL remains a Zacks Rank #2 (Buy), with a VGM score of ‘A.’ Last week, it reported second quarter fiscal 2017 earnings of $1.92 per share, beating our estimate of $1.87.
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