spot_img
28.1 C
Philippines
Friday, March 29, 2024

China Southern rises on talks to sell shares

- Advertisement -

Shares of China Southern Airlines Co. climbed in Hong Kong trading after Asia’s biggest carrier said it is in talks to sell a stake to American Airlines Group Inc.

The negotiations are over “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 said in an exchange filing Sunday. The stock, which resumed trading Monday, gained 0.7 percent to close at HK$5.49, after advancing as much as 5.3 percent earlier.

Trading in the Guangzhou-based operator had been suspended since March 23 after Bloomberg News reported that Fort Worth, Texas-based American Airlines will likely make an investment of about $200 million in China Southern’s Hong Kong-listed shares through a private placement. American Airlines would nominate an observer without voting rights to the Chinese company’s board, according to people familiar with the matter.

The companies haven’t reached a binding or definitive agreement, and the cooperation may or may not proceed, China Southern said in its statement. American Airlines spokeswoman Polly Tracey declined to comment.

For American, a deal would strengthen its presence in the Chinese market after rival Delta Air Lines Inc. acquired a minority stake in China Eastern Airlines Corp. in 2015. China Southern would be the last of the nation’s top three airlines to bring in a non-mainland Chinese strategic investor. Cathay Pacific Airways Ltd., based in Hong Kong, owns about 18 percent of flag carrier Air China Ltd.

- Advertisement -

“All big US carriers will be making deals of one kind or another with major airlines all over Asia and certainly within China,” Robert Crandall, former chairman of American, told Bloomberg Television on Monday. “These things are going to grow and because of the network nature of the airline industry, everybody is going to play and everybody needs to play.”

An agreement will help boost the expansion plans of China Southern, which indicated in January that it was considering bringing in strategic investors. The carrier has been adding routes to Australia, New Zealand and countries in Southeast Asia as it competes with China Eastern and Air China. A tie-up will increase China Southern’s visibility in the US, said Will Horton, a senior analyst at the CAPA Centre for Aviation in Hong Kong.

“China Southern may be the largest airline in Asia but it’s relatively unknown in the US,” Horton said. “US consumer mindset changes if American is putting cash in: China Southern isn’t just another airline or partner, it’s a carrier American believes in.” 

- Advertisement -

LATEST NEWS

Popular Articles