China Southern Airlines Co. announced on Tuesday that it has agreed to sell more than two percent stake to American Airlines for approximately $200 million. The deal makes the American Airlines the second U.S. carrier to own a minority stake in Chinese carrier after Delta Air Lines picked up a 3.55 percent stake in China Eastern Airlines in 2015.        

Like Us on Facebook

In a filing with the Hong Kong stock exchange, China Southern said it would issue 270.61 million Hong Kong Listed shares - representing roughly 2.76 stake - to American Airlines at a 4.6 percent premium on the previous closing price.

China Southern also said that the details of the agreement are yet to be finalized, but it is likely to include code-sharing, staff exchanges, and collaboration on sales and passenger loyalty programs.

The deal is subject to regulatory approval, but analysts are hopeful that the deal will pass the regulatory hurdle despite the tensions between China and U.S. over the impending trade war and President Donald Trump's ongoing campaign for trade protectionism.

American Airlines is picking up a very small stake in the Chinese carrier, which would not give any controlling stake in the company. Nonetheless, the deal will help in opening up China's fast-growing aviation market to American Airlines. After the deal, the American carrier will especially try to capitalize on the growing number of Chinese tourists to the United States.

The shares of China Southern, which opened higher, were down by 1.28 percent during the morning trade. Last week, China Southern suspended trading of its shares at Hong Kong stock exchange ahead of the sales talk.

Both American Airlines and China Southern are key players in the global Aviation industry. While American Airlines is the world's largest carrier in terms of fleet size and revenue, the latter is world's fourth-largest airline in terms of passenger numbers.          

TagsAmerican Airlines, China Southern Airlines, china, Chinese Aviation Market