American Airlines has agreed to pay $200 million for a stake in China Southern Airlines, the biggest of China's three major state-owned carriers, in a bid for a bigger share of the country's growing travel market.
American Airlines is the world's largest carrier by scheduled passengers carried, while China Southern is fourth globally and the biggest in Asia, according to the International Air Transport Association (IATA).
The deal could give American a foot in the door of China's rapidly expanding air transport market, while China Southern said the move would support its own ambitions of expanding its global presence.
China Southern will sell more than 270 million, or 8.83 percent, of its Hong Kong-listed shares to American, according to a statement by the Chinese airline filed with the Hong Kong stock exchange.
The HK$5.74 per share fee was a 4.6 percent premium to Monday's closing price and values the deal at HK$1.55 billion ($200 million).
China Southern also is listed in Shanghai. The deal gives American 2.68 percent of all the Chinese carrier's shares traded across both markets.
China Southern said in the statement that the two companies "may seek to increase cooperation" in code-sharing, staffing, sales, passenger loyalty programmes and sharing of airport facilities, but gave no specifics.
Foreign carriers are forging steadily closer ties with Chinese airlines to gain a bigger share of China's air travel market, which is growing strongly while travel in Europe and North America is leveling off. In exchange, Chinese carriers get access to experience and management skills.
China is forecast to pass North America over the next two decades as the biggest air travel market.
China's economic growth is slowing but tourism spending is rising as communist leaders encourage growth of service businesses in an effort to reduce reliance on heavy industry.
Chinese spending on air travel rose 10.6 percent in 2015, compared with 1.7 percent in the United States, according to the International Air Travel Association.
Two years ago, Delta Airlines paid $450 million for 3.55 percent of China Eastern Airlines. The third major U.S. carrier, United Airlines, has a partnership with Air China, the third major Chinese government-owned airline. Hong Kong-based Cathay Pacific Airlines owns 18 percent of Air China.
China Southern, headquartered in Guangzhou, near Hong Kong, is China's biggest carrier by passenger volume but is known for sometimes haphazard service, with flights delayed or canceled with little notice.
China Southern says it operates more than 2,000 flights a day to 224 destinations in 40 countries and regions in Asia, Europe, North America and Africa. It says it carried 115 million passengers in 2016.
The partnership with American Airlines "is expected to provide continuous impetus for the company's long-term growth," said China Southern's announcement.
American, headquartered in Fort Worth, Texas, says it operates 6,700 flights a day to nearly 350 destinations in more than 50 countries.