American Airlines Buys Shares in China Southern Airlines, to begin Partnership with Chinese Airline
American Airlines has officially agreed to purchase 2.76% of the shares of China Southern Airlines. The transaction is valued at $200 million US dollars. This announcement came Tuesday morning via the Hong Kong Stock Exchange. (via Skift.com)
In addition to now owning 2.76% of China Southern Airlines, American Airlines will expand its cooperation with the Chinese airline. This cooperation could include codeshare flights and shared airport facilities. The deal isn’t final as it’s awaiting regulatory approval. (via The Associated Press)
China Southern Airlines and American Airlines
China Southern Airlines is the largest airline in China in terms of fleet size, revenue, and passengers carried. The airline is based in Beijing and currently, serves 190 destinations with a fleet of 522 aircraft. China Southern Airlines is a member of the SkyTeam alliance and currently codeshares with Delta Air Lines, one of American’s largest competitors.
China is expected to become the largest aviation market in the world within the next few decades. Foreign interest in Chinese airlines has increased over the last few years. Recently, Delta Air Lines bought over 3% of China Eastern Airlines. Both Delta Air Lines and United have cited interest in the growing Asian market.
Having shares in China Eastern Airlines could allow American Airlines to expand into Asia and better serve the rapidly growing market.
American Airlines President, Robert Isom said the following in a press release,
China Southern’s extensive network within China touches developing and thriving markets that only a Chinese carrier can reach, and they have a reputation and record of excellence. We are two of the biggest carriers in the world, and our networks are highly complementary, with the potential to offer China Southern and American customers an unmatched range of destinations in two critical markets for business and leisure travelers. This investment will allow us to build a relationship that will benefit our teams, the communities we serve and the millions of customers around the globe who travel with us each day.
Until recently, American Airlines’ presence in Asia was dismal. Both United and Delta had a far more extensive network in Asia. Today, American Airlines serves Beijing, Shanghai, Hong Kong, Seoul, and Tokyo. However, today’s announcement indicates that American wants to continue to grow in Asia.
This was somewhat unexpected, at last for me it was. I wasn’t aware of any potential or rumored deals involving American Airlines and any foreign carrier. However, this appears to be a very smart move by American. Asia is the fastest growing market for commercial aviation and China is projected to be the largest market for commercial aviation in the next two decades. American’s investment in China Southern Airlines will allow the two airlines to codeshare and expand their route networks
What do you think about this $200 million deal?