The stock of American Airlines (AAL 50.15, +1.72, +3.6%) is taking flight today following the news that Qatar Airways has disclosed its interest in acquiring a large stake in the Fort Worth-based airline. Qatar Airways communicated its interest in an unsolicited notice, which advised that Qatar Airways intends to purchase at least $808 million of AAL's common stock on the open market.
American Airlines has a market capitalization of $23.9 billion, so this opening salvo from Qatar Airways translates into an approximately 3.4% stake in AAL.
We say "opening salvo" because the notice also stipulates that it was disclosed in a conversation between the respective CEOs, which was initiated by the CEO of Qatar Airways, that Qatar Airways has an interest in acquiring approximately a 10% stake.
The advanced overture from Qatar Airways is just that at this juncture, as American Airlines was quick to note that its Certificate of Incorporation prohibits anyone from acquiring 4.75% or more of the company's outstanding stock without advance approval from the Board following a written request in accordance with company procedures, which it has yet to obtain from Qatar Airways.
There are foreign ownership laws too, American Airlines said, that limit the total percentage of foreign voting interest to 24.9%.
The notice of Qatar's intention to take a large stake in American Airlines should create a very busy day for American Airlines CEO Doug Parker who has been critical of the unfair competitive benefits Gulf carriers have, including Qatar Airways, in receiving government subsidies.
At the same time, the notice could lead to a busy day of trading in the airline stocks, many of which, like United Continental (UAL 78.31, +0.72, +0.9%), Delta (DAL 53.06, +0.79, +1.5%), and Southwest Airlines (LUV 62.06, +1.03, +1.7%), are trading higher in early action.
Separately, Southwest Airlines was upgraded by Argus this morning to Buy from Hold.