AA Looks East

The largest US airline by passengers carried is investing in the largest Chinese airline as AA looks East for growth and opportunities.

American Airlines is purchasing a minority stake in China Southern Airlines with a deal to buy $200 million in China Southern stock. The deal will give American a 2.68% stake in China Southern and will help the two carriers move forward with a strategic cooperation agreement. If approved by regulators it’ll open up opportunities for code sharing and more.

Code sharing is a way for airlines to more efficiently schedule passengers on each other’s flights. AA says they hope to begin later this year. On the surface this makes sense as it follows Delta Airlines which purchased 3.55% of China Eastern Airlines for $450 million in 2015.

It’s interesting to note that AA is a member of the oneworld alliance while China Southern is part of SkyTeam. Clearly there will be many discussions around how this affects each alliance. However American Airlines sees value with new access to more than 70 Chinese destinations, while China Southern will be able to link to more than 80 destinations including North and South America. Stay tuned as the airline partner story is only heating up.

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