China Southern Shares Suspended After Report of American Airlines Investment

(Beijing) – Trading in shares of China Southern Airlines Co. Ltd., one of the nation’s top three carriers, was suspended in Hong Kong and Shanghai on Thursday, after foreign media reported the carrier was in talks for a major equity tie-up with US peer American Airlines.

China Southern said it requested the halt in Hong Kong “pending the release of an announcement in relation to the possible major strategic cooperation,” according to a filing to the Hong Kong stock exchange. It was not more specific about the nature of the cooperation.

Earlier, Bloomberg reported the airline was in advanced talks for a tie-up with American Airlines Group Inc., one of the top U.S. carriers. The report said the tie-up would most likely involve a sale of about $200 million worth of China Southern’s Hong Kong-listed shares to American Airlines, probably through a private placement.

China Southern currently has a market value of about $10 billion, meaning the investment would equate to about 2% of China Southern’s stock.

Such a tie-up would come as China’s airlines look to expand their global footprint through similar partnerships. Rival China Eastern Airlines previously sold a stake in itself to U.S. carrier Delta Air Lines and formed a budget carrier joint venture based in Hong Kong with Australia’s Quantas Airways. Budget carrier Spring Airlines has formed another joint venture to tap the Japanese market.

Contact writer: Yang Ge (geyang@caixin.com)