American Airlines has taken a £159m stake in China’s largest airline, in a move that means the country's three biggest carriers now have significant partnerships with foreign competitors.
China Southern said today it will issue shares worth HK$1.55bn to a subsidiary of American Airlines.
The tie-up follows Delta’s $450m investment into China Eastern Airlines in 2015 and the 2006 partnership of Hong Kong flagship airline Cathay Pacific with Air China.
Kelvin Lau, an analyst with Daiwa Capital markets, told Reuters American Airlines’ move “makes sense” but was not so significant it will lead to any management changes.
The largest Chinese carrier in terms of passengers, China Southern said the investment from American Airlines will “achieve the strategic goal of building a world-class aviation industry group,” according to a company filing.
The finer details are yet to be ironed out, but according to reports by Associated Press, closer cooperation between the airlines could include code-sharing and tying up passenger loyalty programmes.
American Airlines’ investment will mean it owns slightly less than three per cent of China Southern and is subject to regulatory approval.