News
American Airlines takes 2.7% stake in China Southern
March 31st 2017
American Airlines on Monday confirmed it would pay US$200 million for a 2.7% stake in Guangzhou-based China Southern Airlines, becoming the second U.S. carrier to take a minority share in a Mainland Chinese airline, following Delta Air Lines’ 2015 investment in China Eastern Airlines. Read More »
American and China Southern said the investment marked the beginning of a long-term partnership, including codesharing, interlining and reciprocal frequent flyer benefit accruals.
“China Southern is the largest airline in China [in Asia] and is the ideal carrier for American, the largest airline in the world, to build a relationship within this critically important market,” American said.
Dallas-headquartered American believes that “China Southern’s extensive network within China touches developing and thriving markets that only a Chinese carrier can reach”.
American flies from Beijing and Shanghai to its Chicago and Dallas hubs and it also connects Shanghai’s Pudong with Los Angeles. The airline has U.S. Department of Transportation approval to launch a daily Beijing-Los Angeles route, but until now the Civil Aviation Administration of China (CAAC) has denied American’s request for slots for the new route at Beijing Capital Airport. In a retaliatory move, American has asked the DOT to withdraw state-controlled Air China’s route authority on the Beijing-Houston route. American’s tie-up with China Southern might give it some new leverage with the CAAC.
China Southern has a relatively small U.S. network. It currently serves both New York’s JFK and Los Angeles ten times a week from Guangzhou and it operates a four-weekly Guangzhou-San Francisco route.
“American customers will be able to access nearly 40 destinations beyond Beijing and more than 30 destinations beyond Shanghai,” American said, while China Southern passengers will gain access to almost 80 destinations in North and South America.
Guangzhou is a relatively low-yielding market. It is unlikely American will add a service to the city, given its proximity to Hong Kong, which American now serves daily from Dallas and Los Angeles.
American will appoint an observer to China Southern’s board.
