Business

American Airlines ties up partnership with China Southern

American Airlines aircraft Image copyright AFP

American Airlines and China's biggest carrier by passengers, China Southern, have agreed a strategic partnership.

The US airline will buy $200m (£159m) worth of shares in the Chinese firm and the two will "seek to increase cooperation".

China Southern is the latest of China's top airlines to bring in an investor from outside the mainland.

The deal should offer American Airlines more possibilities to tap into China's growing aviation market.

China is one of the biggest sources of tourists to the US, with Chinese carriers aggressively expanding their fleets and range of overseas destinations to cater to the strong growth in traveller numbers.

For both China Southern and American Airlines, the deal is expected to improve access to smaller cities, increasing the number of routes both firms can offer between the world's two largest travel markets.

Image copyright AFP
Image caption Trip to the US, anyone?

China Southern is the last of China's three major airlines to bring in a strategic investor from outside mainland China.

Hong Kong's Cathay Pacific holds about 18% in flag carrier Air China while US airline Delta bought a 3.6% stake in China Eastern in 2015.

Under the latest deal, American Airlines will own a 2.7% share of its new partner.

In a filing to the Hong Kong stock exchange, China Southern said the two sides would work together to share transport, staff and airport facilities - as well as cooperating on code sharing and passenger loyalty programmes.

The deal comes as Beijing says it wants to improve efficiency and competitiveness of its state-owned airlines by pushing more strategic investment from private capital.

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