American Airlines has committed to purchase $200 million of stock in China Southern Airlines.

The investment will give American a 2.7% stake in China Southern, according to a China Southern filing on the Hong Kong Stock Exchange.

As part of the deal, the two carriers expect to begin codeshare and interline agreements later this year. American flies to Beijing and Shanghai on mainland China as well as to Hong Kong. The agreements will give American customers access to 40 destinations in the China Southern network beyond Beijing as well as 30 connecting destinations from Shanghai.

China Southern customers would gain access to nearly 80 American Airlines destinations via interlines and codeshares from Los Angeles, San Francisco and New York.

The partnership is also expected to include shared mileage accrual and redemption.

American’s investment in China Southern pairs the world’s largest and fourth-largest airlines in 2015 by passengers carried dand positions American to compete more effectively with rivals United and Delta in the U.S.-China market.

United has a codeshare and mileage partnership with Air China while Delta is a 3.55% owner of China Eastern.

China Southern’s hub is in the southern Chinese city of Guangzhou.

Tuesday’s announcement followed a China Southern filling on the Hong Kong Stock Exchange on Sunday that said it was negotiating a partnership with American.

By Robert Silk

Source: Travel Weekly