American Airlines CEO says ‘no plans’ to raise its stake in China Southern, even as rivals do

05-Feb-2019 Intellasia | South China Morning Post | 6:00 AM Print This Post

American Airlines has ruled out making a larger investment in China Southern Airlines, saying it will maintain its holding unchanged at less than 3 per cent, even as a rival firm recently bought a 5 per cent stake in the mainland’s biggest carrier by passengers.

Doug Parker, the chief executive of American Airlines, said “no, we’re happy with our existing stake”, when asked by the Post of the need to adjust its 2.76 per cent stake in the Guangzhou-based carrier.

Doha-based Qatar Airways announced in January that it had acquired certain A and H shares in China Southern Airlines for an undisclosed sum in 2018, giving it a 5 per cent stake in the airliner.

Parker was in London attending a press conference with fellow executives of airlines belonging to the Oneworld alliance, as the group celebrated its 20th anniversary last week.

Signalling his comfort with its Qatari counterpart being a co-shareholder in the same Chinese airline, Parker said he had “absolutely” no problem. He was speaking on the sidelines of the event.

Qatar Airways takes 5 per cent stake in China Southern Airlines in sign that Beijing is encouraging more foreign investment

The Gulf carrier became the second foreign airline after American Airlines to buy into China Southern in a deal that was completed on December 28 last year.

The airline, fully owned by the Qatari government, said previously that it may increase its investment in China Southern before the end of the year should it wish to.

The share purchase was announced during a period of tensions between Qatar Airways and American Airlines, with both carriers feuding over issues involving competition and market access.

American Airlines is among a group of US carriers that believe Qatar Airways has unfair subsidies, which have enabled it to expand its fleet size and increase the number of flights serving US cities.

“That doesn’t affect our relations with Qatar at all,” said Parker, when asked of the impact of Qatar Airways’ status a shareholder in China Southern.

American Airlines, the largest airline in the world, paid $200 million (HK$1.5 billion) in March 2017 to acquire its stake in the Chinese carrier. The deal gives it a foothold in the world’s second largest air travel market, which some analysts believe may become the world’s biggest in the next decade.

Under the deal, the two can code-share on flights between China and the US. American Airlines can also provide flight bookings on almost two dozen domestic Chinese routes.

The partnership is expected to strengthen when Beijing’s new Daxing Airport opens later this year. China Southern will be a tenant in the new facility, paving the way for expanded international flights out of Beijing.


Category: China

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