China Southern Airlines Co has confirmed it is selling a small stake to American Airlines.
The $200 million deal gives American 2.68% of China’s largest carrier by passenger numbers but no voting rights on the executive board.
"We are two of the biggest carriers in the world and our networks are highly complementary," American Airlines President Robert Isom said in the statement.
For China Southern the share sale will help it ‘achieve the strategic goal of building a world-class
aviation industry group.’
"We’re pleased to begin this relationship to better connect two of the world’s largest aviation markets and leading economies," China Southern chairman Wang Chengshun said.
Once the transaction is completed it would mean the three biggest airlines in China will all have strategic investment from foreign carriers.
In a filing by the Guangzhou based carrier, the airlines will likely increase collaboration later this year in the form of code-sharing and possibly sales, loyalty programs and sharing of airport facilities.
For American customers that means onward connections throughout China to up to 70 destinations beyond Beijing and Shanghai.
Chinese inbound travelers will have access on American’s route network to 80 cities via Los Angeles, San Francisco and New York.
"For the price of one widebody aircraft, American could finally be securing a major mainland partner, but it’s a long road," said CAPA Centre for Aviation analyst Will Horton.
Delta Air Lines has a similar sized minority share in China Eastern Airlines.
