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Massive US carrier about to buy into Asia’s biggest

March 28, 2017 Headline News No Comments Email Email

The prospect of American Airlines buying into China Southern Airlines is firming up fast, with Guangzhou-based China Southern confirming that it is in talks to sell a stake to American.

Rumours of talks have circulated over the past week or so, but yesterday’s revelation saw shares in China Southern climb to their highest level in almost three months.

In a Hong Kong stock exchange filing on Sunday, China Southern confirmed the negotiations centre on “a possible major strategic cooperation with American Airlines, Inc. involving, among others, proposed issue of shares of the company and other business cooperation.”

China Southern Airlines A380

That was enough to drive up stock prices in China Southern by 5.3%, the highest since 4 January 2017.

Trading in the Guangzhou-based operator has been suspended since last Thursday, 23 March 2017, after Bloomberg News reported that American was  likely to invest about USD 200 million in China Southern’s Hong Kong-listed shares through a private placement.

American Airlines Group is by most measures the world’s largest airline: by fleet size, revenue, profit, passengers carried and revenue passenger kilometres. Reports suggest American will nominate an observer without voting rights to China Southern’s board.

Delta Air Lines, a big rival of American, acquired a minority stake in China Eastern Airlines in 2015.

The International Air Transport Association (IATA) forecasts China will overtake the US to become the world’s largest market in terms of passenger numbers by 2024.

Written by Peter Needham

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