China's civil aviation sector is accelerating its move to mixed-ownership in line with the reform of State-owned enterprises (SOEs) as determined by the government, with China Southern Airlines (CSA) taking the latest step in this area, according to media reports.
CSA will issue 270 million Hong Kong-listed H shares worth HK.55 billion (9.6 million) to American Airlines, at a price of HK.74 per share, up 4.6 percent from Monday's closing price, according to CSA's announcement on Tuesday morning.
The Chinese carrier will issue 270.61 million H-shares, representing 2.68 percent of the enlarged share capital of the airline, it said in a filing to the Hong Kong stock market, according to a Reuters report on Monday.
The company's announcement also said that CSA has signed a framework agreement and series of agreements on business cooperation with American Airlines.
CSA has become the last among the three national airlines to introduce foreign investment, following in the footsteps of China Airlines and China Eastern Airlines, domestic financial news site wallstreetcn.com reported on Tuesday.
CSA's deal with American Airlines will make the latter the second U.S. carrier to own part of a Chinese airline.
China Airlines started cross-shareholding cooperation with Cathay Pacific Airways, a Hong Kong-based carrier, in 2006, and U.S.-based Delta Air Lines bought 3.55 percent of China Eastern Airlines for 0 million in 2015.
As the largest airline in the global market, American Airlines sets a good model for the Chinese civil aviation sector thanks to its rich experience in capital operation and hub construction, Lu Da, an analyst with Shenwan Hongyuan Securities, was quoted as saying in the media report.
Its wide international route network is helpful for CSA to open new global markets, Lu added.
The deal could also widen American Airlines' access to China, one of the biggest sources of tourists to the U.S., according to a Reuters report on Tuesday.
In addition, it will help the U.S. carrier compete with rival Delta, which has invested in foreign carriers in Mexico, Brazil and Britain in recent years,