China Southern to sell stake to American Air

beijing/hong kong — China Southern Airlines, Asia’s biggest carrier by passengers, is in advanced talks to sell a stake to American Airlines Group, according to people familiar with the matter.

The negotiations focus on an investment of about $200 million by Fort Worth, Texas-based American in China Southern’s Hong Kong-listed shares, said the people, asking not to be identified as talks are confidential. The sale likely would take place through a private placement, one of the people said. China Southern has a market value of about $10 billion.

Bringing in the world’s largest carrier as a partner will help the Guangzhou-based airline expand its network through codesharing 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 acquired a minority stake in China Eastern Airlines in 2015.

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

Details of a deal are subject to change and a transaction could still fall through.

A spokesman for American Airlines declined to comment. China Southern representatives couldn’t immediately comment. Trading in the shares of the Chinese carrier was suspended in Hong Kong and Shanghai Thursday, pending an announcement of a possible major strategic cooperation, according to an exchange filing. — Bloomberg