(Bloomberg) -- American Airlines Group Inc. set the stage for possible flights to the Middle East after it set aside a long-running quarrel with Qatar Airways to revive a suspended marketing pact.

The two airlines will seek U.S. regulatory approval to reinstate a codeshare agreement that ended in 2017 amid a dispute initiated by the three largest U.S. carriers over government subsidies they said were giving an unfair competitive advantage to Qatar and two other Persian Gulf rivals. That same year, American also objected to Qatar Chief Executive Officer Akbar Al Baker’s plan to buy a stake in the Fort Worth, Texas-based carrier.

Flights to Doha, Qatar’s capital, would be the latest front in American’s plan to expand its global network to markets in the Middle East, Africa and India. The carrier will begin flights to Casablanca, Morocco, in June and recently said it would fly to Bangalore, India, starting in October. American will resume service to Tel Aviv in September. None of the largest U.S. carriers currently flies its own aircraft to the Middle East.

“We can’t announce today’s news with Qatar Airways without acknowledging there have been differences between our airlines,” American Chief Executive Officer Doug Parker and President Robert Isom said in a message to employees Tuesday. “However, during the past several months, the dialogue has been good, and we have agreed that we can move forward and begin a new chapter.”

Moving On

The codeshare agreement will allow the airlines to sell seats on some of each other’s flights. Pending approval from the U.S. Transportation Department, American would place its airline code on select Qatar flights from the U.S. to Doha. Qatar will place its code on some flights from American’s domestic hubs and international service to and from Europe, the Caribbean and Central and South America, the carriers said.

Qatar Air and American “have moved on from past issues,” Al Baker said in a statement Tuesday.

American “would very much like to” eventually fly its own aircraft to Doha and build additional routes in Africa, the Middle East and India, said Vasu Raja, the carrier’s senior vice president for network development. “We are looking at it right now. It’s not a 2020 thing, or even early 2021, but it’s our intention whenever we have an airline partner to be able to fly into their hub.”

Unfair Advantage

The United Arab Emirates agreed in 2018 to increase financial transparency at its state-owned Emirates Airline and Etihad Airways PJSC as part of a deal to resolve claims that billions of dollars in government susbsidies gave the airlines an unfair advantage. The UAE also agreed to issue annual public financial reports under internationally recognized accounting standards. The accord grew out of claims first made by U.S. carriers in 2015 against those carriers and Qatar Air.

In a January 2018 agreement with the U.S. government, Qatar also committed to greater financial transparency and said it wouldn’t run indirect flights to the U.S. through other countries.

American, Delta Air Lines Inc. and United Airlines Holdings Inc. argued that Qatar Air was using its 49% stake in the parent company of Air Italy to continue flying government-subsidized routes into the U.S. In a July 2019 meeting, President Donald Trump told the carriers to take the dispute to a DOT resolution process, people familiar with the issue said at that time.

Air Italy is now being liquidated and has said it will guarantee flights scheduled through Tuesday.

Qatar CEO Al Baker pledged to take a 10% stake in American after the airlines ended their codeshare agreement in 2017, but abandoned the plan following a chilly reception from the U.S. carrier. He never followed through on threats to leave the Oneworld airline alliance led by American and British Airways.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Susan Warren

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