Qatar Airways still pursuing American Airlines stake after code share hitch

[DOHA] Qatar Airways said it will go ahead with plans to buy a stake in American Airlines Inc even though the US carrier is ending their code-share agreement.

American announced on Wednesday that it was cancelling code-share agreements with Qatar Airways and Etihad Airways as "an extension of our stance against the illegal subsidies that these carriers receive from their governments".

Both Middle East airlines deny they are state subsidised.

American's decision to end the agreements which allow airlines to book passengers on each other's flights, ramps up an acrimonious dispute between US carriers and Gulf competitors over competitive advantages.

Qatar Airways chief executive Akbar al-Baker said on Thursday he was disappointed by the decision, but it would not affect the Middle East carrier's plans to buy up to a 10 per cent stake in American, announced last month.

"Our stock purchase request and filing is going ahead as normal. We had to clarify certain questions of the regulator, which we compiled with," Mr al-Baker told reporters in Doha.

Qatar Airways sent a revised antitrust filing to US regulators on Wednesday seeking clearance to buy up to a 10 per cent stake in the US carrier, according to the filing.

A stake in American would add to Qatar Airways' investment portfolio, which already includes a 20 per cent stake in British Airways-owner International Airlines Group and 10 per cent of South America's Latam.

American Airlines CEO Doug Parker, however, said in a letter to his employees last month that "We aren't particularly excited about Qatar's outreach" and that it was puzzling given the US carrier's very public stance on state support given to Gulf carriers.

American and other US carriers have charged that state subsidies allow Qatar Airways, Etihad and Emirates to offer lower fares and more amenities to long-haul, international travellers.

They are pressing the United States government to curb the Middle Eastern carriers' access to US airports, and the White House is considering their request, according to government officials and airline executives who have spoken to the White House.

Mr Al-Baker said American's decision to end the code-share agreement was "not in the spirit of the oneworld alliance" and that Qatar Airways had other partners in the United States "who want to work with us".

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

Mr Al-Baker previously said Qatar Airways would buy American shares on the open market before formally seeking board approval from the US carrier to increase its ownership.

The US airline's own rules require advance approval from its board for the purchase of a stake of 4.75 per cent or more.

American said on Wednesday that cancelling code-sharing agreements with Qatar Airways and Etihad would not have a material financial impact for the US carrier.

Etihad, which flies to six US cities, accused American of being "anti-competitive" and "anti-consumer" and said it was disappointed with the decision.

An interline relationship between Etihad and American, which allows customers from two airlines to buy connecting flights on one ticket, would remain in place to connect passengers to secondary markets, an Etihad spokeswoman said.

REUTERS