American Airlines is negotiating a potential share purchase
of China Southern Airlines stock, China Southern reported in a Hong Kong Stock
Exchange regulatory filing Sunday.
China Southern described the potential deal as a "possible
major strategic cooperation" that could involve an issuance of shares to
American and "other business cooperation."
The filing provides no information on what portion of China
Southern shares American might purchase. American declined to comment on the
filing Monday morning.
If a deal goes through, it would likely facilitate steps
such as codesharing and a reciprocal miles agreement between the two massive
airlines. American carried the most passengers of any airline in the world in
2015, the most recent year for which IATA has completed such statistics, and
China Southern was the world's fourth-largest carrier.
China Southern is a member of the SkyTeam alliance while
American is a Oneworld member. Nevertheless, the partnership would help the
carriers compete in the U.S.-China market with Star Alliance members United and
Air China, which codeshare and partner on their mileage programs, as well with
Delta and the third member of China's Big Three, China Eastern. Delta purchased
a 3.55% share of its fellow SkyTeam member in 2015, and the two carriers have
an extensive codesharing deal in addition to a miles partnership.
Under the existing U.S.-China Air Transport Agreement,
routes between the U.S. and China's largest markets of Beijing and Shanghai are
capped, leaving alliances as the carriers' primary was of claiming market
share.
Gaining stakes in the U.S.-China network figures to be
crucial for American and its rival U.S. carriers in the years to come. In a
2016 forecast, the Department of Commerce predicted that by 2021 China would
grow from the fifth-largest origin market for foreign visitors to the U.S. to
the third-largest, surpassing the U.K. and Japan.