The state-owned China Southern Airlines is currently pursuing a sale with the American Airlines (AA), with talks reportedly having reached to the advanced stage. If the talks are successful, it would bring together two of the biggest airlines in the world.

China Southern Airlines is holding discussion to sell a stake worth $200 million to the American Airlines, Bloomberg reported citing people familiar with the matter. The sale would reportedly take place through a private placement and after the sale procedure is completed, AA would nominate an observer without voting rights on the board of China Southern.  

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Meanwhile, trading of China Southern's shares has been halted at the Hong Kong Stock Exchange ahead of the sales talk. The Chinese carrier in a statement cited "the release of an announcement in relation to a possible major strategic cooperation" as the reason for halting the trading of its shares at the Hong Kong Exchange.

A stake in the China Southern would help AA, which is already the world's largest carrier, to get formidable footprint in China's fast growing Aviation market. According to International Air Transport Association, China is on its way to become the world's biggest aviation market in terms of the passenger numbers.

The state-owned Chinese carrier is one of the key players in the domestic as well as international aviation markets. The carrier is the world's sixth-largest airline in terms of passenger carried and is also Asia's largest airline in fleet size. It connects to 350 destinations spread across 50 countries, but is mainly focused on North America, the Caribbean, South America, and Europe markets.

Southern China's decision to go for stake sale represents the Chinese government's decision to diversify its ownership pattern in its state-owned enterprises. According to reports, government has asked public sector units in power, energy, defence and aviation to broaden their ownership pattern in the current financial year.     

TagsAmerican Airlines, China Southern Airlines, china, Chinese Aviation Market