China Southern in tie-up talks with US airline

China Southern Airlines is in talks with American Airlines over a possible tie-up, according to reports.

Reuters said this week that the agreement could involve the US carrier taking an equity stake in the Guangzhou-based airline.

This would mark an alliance between the world’s largest airline group and Asia’s biggest carrier, in terms of passenger traffic. Between them, the two airlines handle more than 250 million passengers per year.

The deal would follow the recent tie-up between Delta Air Lines and China Eastern, which saw the US carrier pay US$450 million for a 3.55% stake in its Shanghai-based partner in 2015. And one senior industry figure said he expects this type of deal to continue in the future.

“All big US carriers will be making deals of one kind or another with major airlines all over Asia and certainly within China. These things are going to grow,” Robert Crandall, former chairman of American, told Bloomberg this week.

China Southern currently operates direct flights to three US hubs: New York, Los Angeles and San Francisco. American meanwhile, provides services to Beijing and Shanghai. An alliance between the two airlines would help the two carriers coordinate their trans-Pacific operations and share resources.

World’s largest airlines (2015 passenger traffic)

1)    American Airlines      –    145m
2)    Southwest Airlines    –    145m
3)    Delta Air Lines           –    139m
4)    China Southern          –    109m
5)    Ryanair                        –    101m