American Airlines (AA, Dallas/Fort Worth) saw the value of its investment in China Southern Airlines (CZ, Guangzhou) substantially decrease by the second quarter of 2019, Gary Leff has said in his travel business blog View from the Wing citing an internal communication.
The airline reportedly told its employees: “Non-operating special items principally included USD52 million of mark-to-market net unrealised losses primarily associated with the company’s equity investment in China Southern Airlines.”
USD52 million would equate to 26% of the original sum of USD200 million that the carrier invested in China Southern only two years earlier, in March 2017. That purchase represented 2.68% of China Southern's enlarged share capital.
The deal was designed to give the two airlines improved mutual access to the world’s two largest travel markets. It made American the second US carrier to own part of a Chinese airline after Delta Air Lines (DL, Atlanta Hartsfield Jackson) bought a 3.55% stake in China Eastern Airlines (MU, Shanghai Hongqiao) in 2015 for USD450 million.
ch-aviation reached out to American Airlines for comment, to which a spokeswoman replied: “We have no additional comment on our China Southern investment.”
