Tag: Gulf (Page 1 of 2)

Canadian Pacific and Kansas City Southern File Merger Application With STB

November 1, 2021 / WIL BALDWIN

CALGARY, Alberta & KANSAS CITY, Mo.–(BUSINESS WIRE)– Canadian Pacific Railway Limited (NYSE: CP) and Kansas City Southern (NYSE: KSU) have announced they have jointly filed a railroad control application with the Surface Transportation Board (“STB”) regarding the proposed transaction to create Canadian Pacific Kansas City (“CPKC”), the only single-line railroad linking the United States, Mexico and Canada.

The comprehensive control application provides an overview of the proposed operational integration of the CP and KCS rail networks, the impact of that consolidation on the companies’ finances and labour needs, and the anticipated competitive and other benefits that will flow from providing shippers with new and better transportation alternatives. Information in the filing outlines the public and customer benefits a CP-KCS combination would bring, including more efficient north-south trade arteries to support the interconnected supply chains of the United States, Mexico and Canada.

In addition to the central foundation of the transaction to invigorate transportation competition and support economic growth across North America, the CP-KCS combination will generate many other public benefits, including:

The creation of more than 1,000 direct new jobs system-wide, including approximately 760 in the United States, over the next three years brought about by expanded rail operations across the combined network.
Capital investments in new infrastructure of more than USD$275 million¹ over the next three years to improve rail safety and capacity of the core north-south CPKC main line between Louisiana and the Upper Midwest.
Avoidance of more than 1.5 million tons of greenhouse gas (GHG) emissions within five years due to the improved efficiency of CPKC versus current operations.
Diverting 64,000 long-haul truck shipments to rail annually with new CPKC intermodal services, eliminating another 1.3 million tons of GHG emissions over the next two decades, saving $750 million in highway maintenance costs.

Rail customers will not experience a reduction in independent railroad choices as a result of the CP-KCS combination. The joint control application reiterates the applicants’ commitment to keep all existing freight rail gateways open on commercially reasonable terms, including the Laredo gateway between the United States and Mexico, and shows how customers will not lose competitive routings because no new regulatory “bottlenecks” are being created. It also describes how the combined company will compete aggressively to attract traffic to its network via new single-line lanes between Canada, the Upper Midwest and the Gulf Coast, Texas, and Mexico.

More than 960 stakeholders, including more than 440 shippers, 186 smaller railroads, dozens of public officials, eight major ports, railroad labor unions representing both CP and KCS employees and 289 rail industry suppliers have written letters to the STB supporting CP’s proposed combination with KCS.

CP has agreed to acquire KCS in a stock and cash transaction representing an enterprise value of approximately $31 billion, which includes the assumption of $3.8 billion of outstanding KCS debt. The transaction, which has the unanimous support of both boards of directors, values KCS at $300 per share, representing a 34 percent premium, based on the CP closing price on Aug. 9, 2021, the date prior to which CP submitted a revised offer to acquire KCS, and KCS’ unaffected closing price on March 19, 2021.²

The transaction is subject to approval by shareholders of each company along with satisfaction of customary closing conditions, including Mexican regulatory approvals. Shareholders are expected to vote on the transaction later this year.

CP’s ultimate acquisition of control of KCS’ U.S. railways is subject to the approval of the STB. In April 2021, the STB determined it would review the CP-KCS combination under the merger rules in existence prior to 2001 and the waiver granted to KCS in 2001 to exempt it from the 2001 merger rules. In August 2021, the STB reaffirmed that the pre-2001 rules would govern its review of the CP-KCS transaction. On Sept. 30, 2021, the STB confirmed that it has approved the use of a voting trust for the CP-KCS combination.

The STB review of CP’s proposed control of KCS is expected to be completed in the second half of 2022. Upon obtaining control approval, the two companies will be integrated fully over the ensuing three years, unlocking the benefits of the combination.

While remaining the smallest of six U.S. Class 1 railroads by revenue, the combined company would have a much larger and more competitive network, operating approximately 20,000 miles of rail, employing close to 20,000 people, and generating total revenues of approximately $8.7 billion based on 2020 actual revenues.

For more information about the benefits of the CP-KCS combination, visit futureforfreight.com

Shell Selects H160 for Operation by PHI in Gulf of Mexico

February 19, 2021 / WIL BALDWIN

Marignane, France, 15, February, 2021 – International energy group Shell has selected leading US offshore helicopter operator PHI to operate four Airbus H160’s to service a support contract in the Gulf of Mexico. The contract marks the entry into the oil and gas market of the H160 with a wealth of design features promising new levels of safety, comfort and schedule reliability in offshore operations.

The three companies – Airbus, PHI and Shell – are cooperating in a unique partnership. In a pioneering move, Airbus will provide one H160 ahead of final deliveries to PHI and Shell for a year-long route-proving programme to enable the operator and the final customer to familiarize themselves with the type’s advanced features and mitigate the normal challenges around entry into service.

At PHI it will be based at Houma, Louisiana and join a large company fleet of H125’s and H135’s deployed in emergency medical service throughout the United States, as well as two H145’s operating for Shell on pipeline survey work in Louisiana, and two H145’s flying the world’s longest harbour pilot shuttle in Mackay, Australia.

With 68 patents, the H160 is the world’s most technologically advanced helicopter and features an unprecedented suite of pilot aids delivered through its Helionix avionics which substantially reduces crew workload and decreases the risk of pilot error.

They include the world’s first ground helipad assisted take-off procedure, a vortex ring state pre-alerting system and a recovery mode to automatically regain steady flight in difficult circumstances.

The H160 is powered by two of the latest Arrano engines from Safran Helicopter Engines and incorporates an embedded monitoring system and a redundancy of sensors, and can be maintained autonomously far from base. The design emphasises robust corrosion defence specifically envisaging offshore missions.

Emirates to Expand Reach in Mexico Via Enhanced Agreement with Interjet Airlines

December 5, 2019 / WIL BALDWIN

Emirates, the world’s largest international airline and Interjet Airlines, one of the fastest growing airlines in North America, have announced an enhanced interline agreement, which is set to open new routes and destinations for passengers travelling between Mexico, the Gulf and Middle East and beyond.

With a single ticket, Emirates’ passengers can now seamlessly connect via Mexico City onto Interjet flights to Leon/Guanajuato, Culiacan, Cancun, Chihuahua, Guadalajara, Merida, Monterrey, Puerto Vallarta, Tampico, Tuxtla Gutierrez, Tijuana and Villahermosa. Similarly, Interjet’s customers will be able to travel with great ease to Emirates’ destinations within the Middle East, Spain, South East Asia, the Far East and North Africa.

“We’re pleased to establish a partnership with Interjet Airlines, allowing Emirates passengers to benefit from increased choice, flexibility and ease of connection to different cities within Mexico and to regional international points beyond. This partnership further demonstrates our commitment to Mexico for the long run, as we continue to look at ways to build our operations in the market to best serve our customers,” said Adnan Kazim, Emirates’ Chief Commercial Officer.

“While the interline agreement is only the start of our collaboration, we’re looking forward to explore more mutual opportunities and a wider scope of partnership in the near future,” he added.

Emirates’ partnership with Interjet started in April 2019 with a one-way Interline agreement, allowing passengers from Emirates’ 12 US gateways to travel to Mexico City on Interjet flights. With the expanded partnership agreement, Emirates’ passengers can now tap into Interjet’s strong domestic presence in Mexico and access 12 destinations beyond Mexico City. The enhanced agreement with Interjet Airlines also provides Emirates’ customers choice of over 15 regional international destinations beyond Mexico City.

“Since our initial interline agreement in April 2019, Interjet’s relationship with Emirates has truly been a success,” said Julio Gamero, Interjet’s Chief Commercial Officer. “This enhanced agreement, provides travelers from both airlines access to a broader network not only with more flight choices, but for Emirates customers, access to more of Mexico with our many domestic connections from Mexico City. When you combine this with seamless reservations, one-stop check-in with baggage checked to the final destination, more legroom between seats and Interjet’s outstanding on-board service, it’s easy to see why this agreement is a win-win for both airlines,” he added.

Starting 9 December 2019, Emirates will launch its new daily service from Dubai (DXB) to Mexico City International Airport (MEX), via the Spanish city of Barcelona (BCN). Effective XXX 2019, Interjet customers can start booking their trips through Emirates’ website, Online Travel Agencies (OTA’s) or travel agents, benefiting from the convenience of holding a single ticket with a single baggage policy.

Emirates’ Clark says Rolls-Royce Needs to Sort Itself Out After Engine Delays

November 23, 2019 / WIL BALDWIN

DUBAI, Nov 22 (Reuters) – The board of Rolls-Royce must urgently address its engine performance problems, the head of Dubai’s Emirates said, as the world’s largest buyer of wide-body jets weighs up who will power its order of Boeing 787 jets.

Emirates agreed to buy its first 787 Dreamliners in a last-minute, $9 billion deal at the Dubai Airshow on Wednesday, without specifying what engine would power it, while reducing its order for the U.S. planemaker’s delayed 777X model.

The 787’s, which can take either Rolls or rival GE Aviation’s GEnx engines, will be delivered to Emirates in 2023, a year later than a tentative purchase plan outlined two years ago.

That gives Rolls-Royce more time to sort out the durability issues in its Trent 1000 engines before Emirates believes a realistic competition can be held.

“Rolls have had a number of wake up calls and they really need to sort themselves out. I think the alarm clock has gone off a number of times,” Emirates President Tim Clark said at the Dubai Airshow.

“If I were on the board, I would be looking to recognise the issues… and deal with them immediately, meaningfully, forcefully and drive change,” he told reporters.

A spokeswoman for Rolls-Royce said it was proud that Emirates had chosen to order 50 Airbus A350s, powered by Rolls’ Trent XWB, in a deal announced this week.

“We are confident in the reliability and performance of our engines, and in our commitment to meeting the high standards expected by our customers,” the spokeswoman said.

“(Emirates) is one of the largest operators of our Trent engines in the world, and we are committed to maintaining our strong relationship with them.”

The Rolls-powered version of the 787 has been hit by repeated technical problems, leading to share price pressure and drawing criticism from airlines.

The engine maker’s chief executive Warren East said on Nov. 7 that the company would spend more on parts and replacement engines to reduce the time aircraft are grounded while turbine blades are replaced.

Clark said that the situation at Rolls was “salvageable” if board acted quickly and accepted the issues they were having.

“With the reputation that (Rolls) has for quality engineering and its excellence in the past, they must restore that as the gold standard,” he said.

He said his comments should not be read as a criticism of any individuals including East.

Clark has been a vocal critic of engine makers, saying in September he wouldn’t take new planes unless their engines were ready and said he was “a little bit irritated” by delays at Rolls and GE.

GE powers the 777X, which Emirates cut its order of on Wednesday after Boeing pushed back its entry into service, partly due to issues with its engines.

Clark said engine makers should only offer technology that was mature enough to work reliably in the demanding conditions of the Gulf, adding: “Don’t use (airlines) as guinea pigs”.

(Reporting by Tim Hepher, writing by Alistair Smout, Editing by Louise Heavens)

Jet Grounding and Delays Overshadow Dubai Airshow

November 15, 2019 / WIL BALDWIN

FILE PHOTO: Emirates Airline Boeing 777 planes at are seen Dubai International Airport in Dubai

DUBAI (Reuters) – An eight-month crisis over the grounding of Boeing’s 737 MAX jets and widespread industrial delays are setting an unpredictable backdrop to next week’s Dubai Airshow, with some airlines reviewing fleet plans even as others look for bargains.

The biennial civil and military expo is a major showcase for wares from jumbo jets to military drones but faces growing questions over demand and the capability of overstretched suppliers, delegates arriving for the Nov. 17-21 event said.

Top of their agenda will be the worldwide grounding of the 737 MAX in the wake of two deadly crashes.

Investors who have pushed up Boeing <BA> shares believe the planemaker is turning a corner after the eight month grounding, with the company predicting commercial flights in January. But it also faces a logjam of undelivered jets that could take 1-2 years to unwind.

State-owned flydubai expects its fleet will now shrink by a third this year, highlighting the cost of the grounding for the biggest MAX customer outside the United States. “Flydubai has very big ambitions … given the scale of those ambitions, there’s little they can do but wait and watch, like everyone else,” said Teal Group analyst Richard Aboulafia.

Boeing lost one potential MAX customer earlier this year as Saudi budget airline flyadeal ditched a provisional order.

Experts say airline frustrations with plane and engine makers could also disrupt plans by the world’s largest jetmakers pushing for order endorsements. The Middle East’s largest aerospace event will give Airbus <EADSY> and Boeing a chance to sit with some of their top customers who have threatened to walk from billions in deals.

The planemakers are struggling to deliver aircraft on time, forcing airlines to delay expansion plans, while engines on some jets are consistently causing issues for carriers.

“This seems to be a systemic issue across the board,” said Novus Aviation Capital Managing Director Mounir Kuzbari.

“As a result, we see stress on the relationship between airlines and the plane and engine makers.” Dubai’s Emirates, by far the region’s biggest airline, has issued a stern warning to plane and engine makers. It will no longer take delivery of aircraft that do not meet performance expectations, raising doubts over $35 billion in pending orders.

Airbus, Boeing and engine makers will be looking to allay concerns as they finalise jet sales with Emirates, which is also looking at reducing an order for the delayed Boeing 777X.

Airbus is seen close to a final order for A330neo and A350 jets while Boeing aims to salvage a provisional order for 787s.

GULF PRESSURE

Air Arabia could, however, steal the show with a planned order of up to 120 Airbus jets, industry sources say.

Kuwait’s Jazeera Airways is in negotiations with Airbus and Boeing for around two dozen airplanes.

Past editions of Dubai’s premier trade event have featured blockbuster deals, often led by Emirates as Gulf carriers redrew the aviation map around their ‘super-connector’ hubs.

But the Gulf hub model is increasingly under pressure as the once-rapid growth of the region’s biggest airlines slows.

“The market continues to be weak for all airlines in the region; we should see a further 2-3% reduction in passenger numbers for the full year,” said Diogenis Papiomytis, Frost & Sullivan’s Global Program Director for Commercial Aviation.

Middle East military leaders touring the displays will try to gauge whether they are on the cusp of another regional splurge on weapons after an escalation in Gulf tensions.

A series of attacks over the summer has highlighted potential security gaps among some of the world’s top defence spenders who now increasingly buy from China and Russia.

(Reporting by Alexander Cornwell, Tim Hepher, Ankit Ajmera, Stanley Carvalho; Editing by Mark Potter)

Trump Meets With Airline CEO’s Over Qatar Subsidies

July 20, 2019 / WIL BALDWIN

WASHINGTON (Reuters) – U.S. President Donald Trump met on Thursday with the chief executives of major American airlines to discuss their accusations that subsidies by Qatar and United Arab Emirates are costing jobs in the United States.

The meeting between Trump and the CEOs of American Airlines, United Airlines, JetBlue Airways Corp, FedEx Corp, and Atlas Air included Vice President Mike Pence, the White House said.

The meeting also included the CEO of state-owned Qatar Airways, Akbar al-Baker, who was also at the White House last week to tout its decision in June to buy five new Boeing 777 freighters.

The White House did not immediately provide details of the meeting.

Since 2015 the largest U.S. carriers – Delta Air Lines, American and United Airlines – have argued their Gulf rivals are being unfairly subsidized by their governments, distorting competition and costing U.S. jobs – something the Gulf carriers deny.

The Partnership for Open & Fair Skies, a group representing Delta, American, United and aviation unions, said it had a “productive meeting” with Trump.

“The president shares our concerns and instructed us to keep working with the U.S. Department of Transportation, which we plan to do,” Scott Reed, the group’s managing partner, said in a statement.

The CEOs of JetBlue, FedEx and Atlas Air have warned that restricting the rights of Qatar Airways could lead to retaliation against U.S. carriers and added, in an April letter, it could lead to “a rapid unravelling of hard-fought aviation rights around the world when other governments take similar action to shield their state-owned airlines from competition.”

Last week, the CEOs of Delta, United and American wrote a joint USA Today op-ed urging the White House to act “decisively to hold Qatar and the UAE accountable.” They suggested that failing to respond would “signal to other countries that they too are free to exploit American workers.”

In April, Secretary of State Mike Pompeo said the administration was scrutinizing Qatar Airways’ acquisition of a 49% stake in Air Italy, which has been flying to U.S. destinations since 2018 in a move seen by U.S. lawmakers as flouting a deal not to add new flights to the domestic market.

Both Republicans and Democrats in Congress have said they were concerned that the deal with the Italian carrier contravened an understanding Qatar Airways reached with the United States in early 2018.

Qatar Airways acquired the 49% of Italian airline Meridiana in 2017, rebranded it Air Italy and transformed it into a carrier with five announced nonstop U.S. destinations from Milan.

The Qatari government said in 2018 it was unaware of any plans to launch flights from Qatar to U.S. destinations via stops in Europe known as “Fifth Freedom” flights.

(Reporting by Steve Holland and David Shepardson; Additional reporting by Jeff Mason; editing by Marguerita Choy, Tom Brown and Richard Chang)

U.S. Arms Makers See Booming European Demand

June 23, 2019 / WIL BALDWIN

53rd International Paris Air Show at Le Bourget Airport

PARIS (Reuters) – U.S. arms makers say European demand for fighter jets, missile defenses and other weapons is growing fast amid heightened concerns about Russia and Iran.

The U.S. government sent a group of unusually high-ranking officials including Commerce Secretary Wilbur Ross to the Paris Airshow this year, where nearly 400 U.S. companies were showcasing equipment as the United States and Iran neared open confrontation in the Persian Gulf.

Lockheed Martin, Boeing and other top weapons makers said they had seen accelerating demand for U.S. weapons at the biennial air show despite escalating trade tensions between the United States and Europe.

“Two Paris air shows ago, there weren’t a lot of orders,” said Rick Edwards, who heads Lockheed’s international division. “Now … our fastest growth market for Lockheed Martin in the world is Europe.”

Many European nations have increased military spending since Russia’s annexation of the Crimea region of Ukraine in 2014, bolstering missile defenses and upgrading or replacing ageing fighter jet fleets. NATO members agreed in 2014 to move toward spending 2% of gross domestic product on defence.

Eric Fanning, chief executive of the Aerospace Industries Association, said the NATO pledge and European concerns about Russia were fueling demand. “I do think it reflects the increasing provocations of Russia,” he said.

Industry executives and government officials say growing concern about Iran’s missile development program is another key factor. Tehran’s downing of a U.S. drone came late in the air show, but executives said it would support further demand.

“Iran is our best business development partner. Every time they do something like this, it heightens awareness of the threat,” said one senior defence industry executive, who asked not to be named.

Edwards said Lockheed’s F-35 stealth fighter, selected by Belgium, is poised to win another new order from Poland, while Bulgaria, Slovakia and Romania are also working to replace Soviet-era equipment.

Edwards and other executives say they see no impact from the ongoing trade disputes between U.S. President Donald Trump and the European Union.

U.S. Army Lieutenant General Charles Hooper, director of the Pentagon’s Defense Security Cooperation Agency (DSCA), said Europe accounted for nearly a quarter of the $55.7 billion in foreign arms sales his agency handled in fiscal 2018.

Hooper said the U.S. government was making concerted efforts to speed arms sales approvals and boost sales to help arm allies with U.S. weapons.

Ralph Acaba, president of Raytheon Co’s’s Integrated Defense Systems business, said the company was boosting automation and working to deliver the Patriot missile system and other weapons in half the five-year period previously typical.

“Europe is really big for us now, and that’s a big change in just the last few years and even the last 18 months,” he said.

In addition to wooing new Patriot customers, Raytheon is upgrading existing systems for customers like Germany, which is likely to finalize a contract worth potentially hundreds of millions of dollars to the company in coming months.

Thomas Breckenridge, head of international sales for Boeing’s strike, surveillance and mobility programs, is eyeing contracts wins for Boeing’s F/A-18 Super Hornet fighter jets in Germany, Switzerland and Finland.

“There’s a huge appetite in Europe for defence as a whole,” he said.

(Reporting by Andrea Shalal; Editing by Jan Harvey)

Airbus Seeks Resolution To German Arms Export Row

May 21, 2019 / WIL BALDWIN

PARIS (Reuters) – Airbus is in discussions to try to find solutions to a row with the German government over a ban on arms exports to Saudi Arabia that threatens a border security contract, Chief Executive Guillaume Faury said on Tuesday.

The planemaker has warned of legal action against Germany after taking financial charges over the long-delayed border contract between Airbus’s defence unit and the Gulf kingdom.

“We are not yet there,” Faury told reporters when asked about possible legal action.

“We are very much impacted by the situation which is now being extended and trying to find different solutions,” Faury said, adding that Airbus had been forced into a corner by the unexpected national export embargo.

Germany acted alone with a ban in October after the murder of Saudi journalist Jamal Khashoggi in Istanbul, irritating other European arms exporters including France, where Airbus is based. The measure was extended in March.

The row comes as France and Germany study a new combat jet, in which Airbus is the industrial partner on the German side.

Faury said Airbus remained committed to the manned and unmanned system, adding it could be eventually opened to other nations including Britain “as a more united Europe”.

The arms row also coincides with a separate spat with Germany over 600 million euros of development loans for the A380 passenger jet, which Airbus has said it will stop producing.

The Berlin government said in March it was in talks with Airbus about the outstanding loans, which also feature in a separate trade dispute about mutual claims of illegal aircraft subsidies between the European Union and the United States.

Faury said Airbus “would not be where it is” without its project to build the world’s largest airliner.

Asked at a media event whether the separate disputes with Germany could be settled in a single negotiation, Faury said “We just want to execute the contracts as they are and I will not say more.”

Airbus continues to have good relations with Germany and other founder Airbus nations, Faury said at the event, taking place as Airbus celebrates its 50th anniversary as a planemaker.

(Reporting by Tim Hepher; Editing by Susan Thomas)

Emirates Profit Hit by High Fuel Costs, Strong Dollar

May 9, 2019 / WIL BALDWIN

DUBAI (Reuters) – Emirates will “work smart and hard” to improve its performance after the Gulf airline’s profit hit a decade low as soaring fuel costs and a strong dollar took a toll on earnings, while passenger growth stalled.

After years of growth, during which it has become one of the world’s biggest airlines as other long-established national carriers have struggled, Dubai-based, state-owned Emirates warned last week profit would be lower than previous years.

It revealed just how badly it had fared on Thursday, reporting a 69 percent fall in net profit to 871 million dirhams ($237 million) in the year to March 31.

Meanwhile, the number of passengers flying Emirates rose 0.2 percent to 58.6 million, its weakest growth rate in at least 15 years, while cargo increased 1.4 percent to 2.7 million tonnes.

Chairman Sheikh Ahmed bin Saeed al-Maktoum said in a statement that the year had been “tough”, with higher oil prices, a strong dollar and stiffer competition, adding “our performance was not as strong as we would have liked”.

While revenue at the airline rose 6 percent to 97.9 billion dirhams, its profit fell to its lowest level since 2009. And profit at Emirates Group, which includes other units, fell 43.7 percent to 2.3 billions dirhams, its lowest since 2012.

Despite the profit fall, Emirates said it will pay the Investment Corporation of Dubai a dividend of 500 million dirhams for the year.

“SMART AND HARD”

Sheikh Ahmed said it was difficult to predict the year ahead but Emirates would “work smart and hard to tackle the challenges and take advantage of the opportunities.”

Unfavorable currency moves in key markets cost Emirates $156 million, while operating costs rose 8 percent with the airline recording its biggest ever fuel bill of 30.8 billion dirhams.

Emirates filled an average of 76.8 percent of passenger seats, slightly lower than the previous year, while increasing the number of available seats by 4 percent.

Fare increases helped Emirates register a 3 percent increase in passenger margin, despite it filling fewer seats.

The number of airline employees fell by 2,074, or 3.3 percent. Overall group workforce rose 1.9 percent to 105,286.

Emirates agreed with Airbus in February to cancel dozens of A380 orders and buy smaller A350’s and A330’s as the planemaker scrapped production of the world’s largest passenger jet.

Emirates, which will take 14 more A380’s between this year and the end of 2021, is developing a new route network for a fleet that will include smaller aircraft, it said last week.

Reporting by Alexander Cornwell; Editing by Kirsten Donovan and Alexander Smith

FILE PHOTO: Emirates Airline Boeing 777-300ER planes are seen at Dubai International Airport in Dubai, United Arab Emirates February 15, 2019. REUTERS/Christopher Pike/File Photo

Qatar Airways Says Air Italy Stake Is In Compliance

April 11, 2019 / WIL BALDWIN

DUBAI (Reuters) – State-owned Qatar Airways on Thursday dismissed concerns its 49 percent stake in Air Italy breaches a 2018 aviation agreement between the United States and Qatar, designed to address U.S. concerns that Gulf airlines had an unfair competitive advantage.

The U.S is “looking very closely” at the deal after Republicans and Democrats said on Wednesday they were concerned it violated the agreement.

Qatar Airways bought a stake in Italian airline Meridiana in 2017, rebranded it Air Italy and transformed it into a carrier with five announced non-stop U.S. destinations from Milan.

Qatar Airways said the stake was “fully compliant” with the 2018 U.S.-Qatar Understandings, an additional pact that accompanied the U.S-Qatar Open Skies agreement.

Since 2015 the largest U.S carriers – Delta Air Lines, American Airlines Group and United Airlines – have argued their Gulf rivals are being unfairly subsidized by their governments, distorting competition.

Gulf airlines have always denied those accusations and last year separate voluntary agreements were reached between the U.S. and Qatar, and the U.S. and the United Arab Emirates to address the concerns. Measures included the airlines not adding new flights to the U.S.

However, Air Italy has been flying to New York and Miami since June last year and was due to start serving San Francisco and Los Angeles from this month and Chicago in May.

Qatar Airways said in a statement its investment in Air Italy, which closed in September 2017, preceded the 2018 agreement but complied with it.

It said its investments in other airlines were not raised as a point of concern during the discussions that led to the 2018 agreement and that the deal does not mention or prohibit cross-border investments.

Qatar Airways also said it did not codeshare on Air Italy’s flights to the U.S. and has no plans to do so.

(Reporting by Alexander Cornwell; Editing by Alexandra Hudson)

“SMART AND HARD”

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