China Southern in talks to sell stake to American Airlines

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.