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American Airlines is negotiating a potential share purchase of China Southern Airlines stock, China Southern reported in a Hong Kong Stock Exchange regulatory filing Sunday.
China Southern described the potential deal as a “possible major strategic cooperation” that could involve an issuance of shares to American and “other business cooperation.”
The filing provides no information on what portion of China Southern shares American might purchase. American declined to comment on the filing Monday morning.
If a deal goes through, it would likely facilitate steps such as codesharing and a reciprocal miles agreement between the two massive airlines. American carried the most passengers of any airline in the world in 2015, the most recent year for which IATA has completed such statistics, and China Southern was the world’s fourth-largest carrier.
China Southern is a member of the SkyTeam alliance while American is a Oneworld member. Nevertheless, the partnership would help the carriers compete in the U.S.-China market with Star Alliance members United and Air China, which codeshare and partner on their mileage programs, as well with Delta and the third member of China’s Big Three, China Eastern. Delta purchased a 3.55% share of its fellow SkyTeam member in 2015, and the two carriers have an extensive codesharing deal in addition to a miles partnership.
Under the existing U.S.-China Air Transport Agreement, routes between the U.S. and China’s largest markets of Beijing and Shanghai are capped, leaving alliances as the carriers’ primary was of claiming market share.
Gaining stakes in the U.S.-China network figures to be crucial for American and its rival U.S. carriers in the years to come. In a 2016 forecast, the Department of Commerce predicted that by 2021 China would grow from the fifth-largest origin market for foreign visitors to the U.S. to the third-largest, surpassing the U.K. and Japan.
Sоurсе: travelweekly.com
