Qatar Airways announced on Wednesday (Aug 2) it has dropped plans to buy a 10-per cent stake in American Airlines, as Doha remains embroiled in a diplomatic row with its neighbours.

A review of the planned move "demonstrated that the investment no longer meets our objectives," the company said in a statement, without elaborating.

The Qatari airline's surprise plan to buy at least US$808 million in American Airlines shares had been disclosed by the US carrier in a securities filing on Jun 23.

The Qatari carrier said it would "continue to investigate alternative investment opportunities in the United States of America and elsewhere that do meet our objectives".

The announcement comes as Qatar remains embroiled in the worst regional crisis in years.

On Jun 5, Saudi Arabia and its allies including Egypt and the United Arab Emirates cut diplomatic and trade ties with Qatar, accusing Doha of backing extremist groups and being too close to Riyadh's arch-rival Iran.

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Qatar, a key US ally, denies the allegations and accuses the Saudi-led bloc of imposing a "siege" on the tiny emirate.

On Jul 13, American Airlines announced its decision to no longer share flights with Qatar Airways as part of its push against government subsidies of Middle East carriers.

American Airlines - along with fellow US carriers Delta Air Lines and United Airlines - has called for the White House to crack down on an alleged US$50 billion in state subsidies to carriers in the Middle East.

The Texas-based US airline said the Qatari decision left American's immediate plans unchanged.

Source: AFP