3 Links I Love: Qatar’s Unwelcome Investment, AirAsia X Won’t Go Long, The Onion Tells the Truth

This week’s featured link:
American’s SEC Filing About Qatar’s Investment InterestEDGAR
American has received word that Qatar is interested in investing in the airline. There’s a lot of speculation out there about this one, so let’s stick with the facts. The link above is to the SEC filing that American was required decided to file.

Qatar isn’t looking to take over or merge with American, mostly because it can’t. This is probably similar to the investment Qatar has made in IAG over in Europe. There are a lot of reasons for Qatar to do this, and undoubtedly one of them is to try to soften the anti-Middle East carrier stance in the US. That’s not going to work. American CEO Doug Parker put out a letter almost immediately after this was announced and it was as blunt as can be, as you would entirely expect. Here’s the gist of it.

While anyone can purchase our shares in the open market, we aren’t particularly excited about Qatar’s outreach, and we find it puzzling given our extremely public stance on the illegal subsidies that Qatar, Emirates and Etihad have all received over the years from their governments. We remain committed to that effort, and we will remain so even with this potential investment.

While today’s news for some of our team may be puzzling, at best, and concerning, at worst, here’s what we know for sure: We will not be discouraged or dissuaded from our full court press in Washington, D.C., to stand up to companies that are illegally subsidized by their governments. We stand for American Airlines, and we stand for all of you and the amazing work you do every day, around the globe, to take care of our customers.

If anything, this development strengthens our resolve to ensure the U.S. government enforces its trade agreements regarding fair competition with Gulf carriers, because we must make it crystal clear that no minority investment in American will ever dissuade us from doing what is right for our team members, our customers and all of our shareholders. And do not worry, per U.S. law, no foreign entity can own more than 25% of a U.S. airline, so there is no possibility that Qatar will be able to purchase enough of American to control or influence our Board, management or our strategy.

American can’t stop Qatar from becoming an investor, at least not up to 4.75 percent of the company.

Two for the road:
AirAsia X CEO Takes to Twitter to Call Off Plans to Fly to Europe and CaliforniaSkift
Two years ago, I spoke with AirAsia’s founder Tony Fernandes and he told me they had their eyes on the west coast of the US and Europe. AirAsia X, the longer-haul division of the company, had flown to Europe previously but pulled out when it proved unprofitable. But with newer aircraft on the market, AirAsia was bullish and made it clear in repeated comments that long haul was coming. And now… scratch that. Tony took to Twitter to say they’ve had a change of heart. New flights will be under 9 hours so they’ll focus on that middle-haul market primarily within Asia that seems to have worked much better. This one looks like yet another proof point that long haul doesn’t work too well for a low cost carrier.

Frontier Airlines Tells Customers To Just Fucking Deal With ItThe Onion
Yes, it’s The Onion. Yes, it’s suppose to be satire. But damn if this doesn’t ring true. I honestly kept reading this thinking that the ULCCs would be much better off if they actually said it like this. “You’re the ones who wanted to save $150, so you’re welcome, assholes.” TRUTH.

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15 Comments on "3 Links I Love: Qatar’s Unwelcome Investment, AirAsia X Won’t Go Long, The Onion Tells the Truth"

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Alex Hill
Member

The Onion speaks truth for sure.

Andrew
Guest

Love the Onion piece. “You’re Uncomfortable For A Few Hours And Then You Get To Be Somewhere Else” – so true. Reminds me of Louis C.K.’s “Everything’s amazing and nobody’s happy” bit.

Itami
Guest

As far as AirAsia X goes, I think Seth Kaplan from Airline Weekly put it very well a few weeks ago: Low-cost shorthaul succeeds because it sacrifices a small amount of revenue for a large amount of cost savings. Low-cost longhaul struggles because it sacrifices a significant amount of revenue for relatively modest cost savings.

crankyreader
Guest

How does Norwegian fit into this model? Is their premium cabin as currently configured able to earn enough revenue to offset relatively modest cost savings, or are they eventually going to have to install a real business class that commands thousands of dollars per ticket?

enplaned
Guest
This looks at it the wrong way. Low cost models succeed in part because there are enough price sensitive consumers who are willing to trade off some discomfort for significantly lower fares. The fact that the flights are short haul is important for two reasons: (1) absolute fares are low (which matters for price constrained individuals) and (2) discomfort is of limited duration. For long haul flights, fare is higher in absolute dollars (lower in relative terms) and that matters to price sensitive consumers. If I don’t have $300 to fly to Florida on a full-service carrier, I don’t have… Read more »
DesertGhost
Guest

Good satire, and good humor in general, are good because they ring true.

Bgriff
Member

Isn’t the Onion article basically what Spirit actually does say to the public?

David M
Guest

Thanks kinda what I was thinking. They’ve softened their tone a bit since he left, but it does sure sound a lot like Ben Baldanza.

Miss Informed
Guest

I don’t know if that’s what Spirit actually said, but it’s sure what I’ve seen reporters say they said.

MK03
Guest

>This one looks like yet another proof point that long haul doesn’t work too well for a low cost carrier.
What about carriers like Scoot, with its upcoming flights to Athens, and Norwegian, with flights to places like Bangkok and Oakland?

Bob Schilling
Member
American seems to have a point about unfair competition, although it’s not quite the case they would like us to believe.  In the Middle East, they’re up against privately held companies with effectively unlimited access to capital, and significantly less pressure to produce short-term returns.  That’s a tough competitor for a corporation like American.  It should also be noted that the Middle Eastern and many Asian carriers put a distinctly superior long-haul product in the air, well beyond the difference suggested by their competitors’ ample funding.  American (and European) carriers have long made the class distinction clear – business class… Read more »
Sean S.
Guest

I think at this point the adage of them putting up a “superior” long-haul hard product is questionable. Outside of the extravagant top-end options, most of the hard product’s available with Gulf carriers in premium economy and business class are the same or worse than American airlines, especially Delta. And the economy section is effectively the same as well.

Bulbul
Guest

Emirates airline is gives best service than others.They give us some facilities.It’s a comfort & relax journey.There are lnflight entertainment option make journey easy & comfortable.if anyone sick he can also journey.As there is a flat belt seat.After all it’s service is amazing.

Andy
Member

I saw that Onion article on Facebook and had the same reaction.

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