China South­ern in talks to sell stake to Amer­i­can Air­lines

New Straits Times - - Business - SU BAO­LIANG

BEI­JING: China South­ern Air­lines Co, Asia’s big­gest car­rier by pas­sen­gers, is in ad­vanced talks to sell a stake to Amer­i­can Air­lines Group Inc, said sources.

The ne­go­ti­a­tions fo­cus on an investment of about US$200 mil­lion (RM885.8 mil­lion) by the Amer­i­can car­rier in China South­ern’s Hong Konglisted shares, said the peo­ple.

The sale likely would take place through a pri­vate place­ment, said a source. China South­ern has a mar­ket value of about US$10 bil­lion.

Bring­ing in the world’s largest car­rier as a part­ner will help the Guangzhou-based air­line ex­pand its net­work through code-shar­ing as it adds more des­ti­na­tions.

The tie-up will help Amer­i­can strengthen its pres­ence in a mar­ket that the International Air Trans­port As­so­ci­a­tion pre­dicts will sur­pass the US to be­come the world’s big­gest in terms of pas­sen­ger num­bers by 2024.

Delta Air Lines Inc ac­quired a mi­nor­ity stake in China East­ern Air­lines Corp in 2015.

Un­der the dis­cus­sions, Amer­i­can would nom­i­nate an ob­server with­out vot­ing rights to the Chi­nese com­pany’s board, said the peo­ple.

Trad­ing in the shares of the Chi­nese car­rier was sus­pended in Hong Kong and Shang­hai on Thursday, pend­ing an an­nounce­ment of a pos­si­ble ma­jor strate­gic co­op­er­a­tion, ac­cord­ing to an ex­change fil­ing.

China South­ern’s stock has gained 35 per cent this year in Hong Kong, com­pared with an 11 per cent ad­vance in the bench­mark Hang Seng In­dex. “The deal would al­low China South­ern and Amer­i­can Air to ex­pand their pres­ence in each other’s home markets with­out be­ing con­strained by the limit on air rights,” said Su Bao­liang, an an­a­lyst at Si­no­link Se­cu­ri­ties Co here. Bloomberg

The deal would al­low China South­ern and Amer­i­can Air to ex­pand their pres­ence in each other’s home markets with­out be­ing con­strained by the limit on air rights.

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