Qatar Airways dropping plan to invest in American Airlines

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Qatar Airways dropping plan to invest in American Airlines

American weighed in on the news today in its own, saying it respects Qatar's decision "not to proceed with its proposed investment".

In June, Qatar Airways announced its intent to purchase up to 10% of American Airlines.

The two airlines are on opposite sides of a nasty fight that has big US carriers complaining that they are unfairly undercut on fares because Qatar and two other fast-growing Middle East airlines get illegal subsidies from their governments.

Executives at American have expressed concern over Qatar Airways' power in the airline industry in the past, after it used its geographical position on the Persian Gulf to build a transfer hub for rich long-haul passengers traveling the world.

American did not immediately return a request for comment Wednesday. But on Wednesday, Qatar said it changed its mind after a review of the deal's finances and American's reaction. The Middle Eastern airlines deny getting illegal subsidies.

American chairman and CEO Doug Parker called the potential investment "puzzling, at best, and concerning, at worst" in a letter to employees. That has forced Qatar Airways to reroute flights, adding time and costs.

Further, American said it would end codeshare agreements with the Qatar and Etihad due to the ongoing dispute.

Qatar Airways, which is the largest shareholder in British Airways parent International Consolidated Airlines Group SA and also holds a stake South America's LATAM Airlines Group, said it would "investigate alternative investment opportunities in the United States of America and elsewhere that do meet our objectives".

American Airlines last week reported a 15.5% drop in second-quarter profit on higher fuel and labor costs.

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