American Airline Agreed to Buy $200 Million Stake in China Southern Airlines


On Tuesday, American Airlines Group Inc (NASDAQ: AAL) agreed to buy $200 million stake in China Southern Airlines Co Ltd (ADR) (NYSE: ZNH), which is the biggest of the three major state-owned carriers in China.

According to an announcement of China Southern, the two companies will expand commercial cooperation in sales, code-sharing, and airport facilities. The deal represents 2.76% of shares of China Southern Airlines, and it requires regulatory approval.

“We're pleased to begin this relationship to better connect two of the world's largest aviation markets and leading economies,” Wang Chengshun, the Chairman of China Southern, said in a statement.

“We are two of the biggest carriers in the world and our networks are highly complementary,” Robert Isom, the president of American Airlines, said in the statement.

Currently, China Southern Airlines operates over 2,000 flights a day to destinations in 40 countries and regions in Asia, Europe, North America and Africa. In 2016, the company carried 115 million passengers, according to China Southern. American Airlines currently operates 6,700 flights a say to destinations in over 50 countries, according to the Texas based company.

The deal will benefit American Airlines in many ways. After the deal, American Airlines could widen access to China, which is one of the largest sources of tourists to the U.S. Meanwhile, the deal could also help American better compete with its rival Delta.

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