China Southern to Exit SkyTeam Alliance, Target New Partners

(Bloomberg) -- Asia’s biggest carrier is abandoning the SkyTeam airline alliance.

China Southern Airlines Co. will exit the partnership in 2019, nearly two years after selling a minority stake to American Airlines Inc., which is a member of the rival Oneworld group. The Guangzhou-based carrier, the continent’s largest as measured by passengers carried, said in a statement that it will seek partners outside of the alliance to build up a global network.

In the past two years, China Southern has increasingly branched out to non-SkyTeam members for partnerships. In addition to the minority stake sold to American Air, it’s in talks to upgrade its code-share agreement with British Airways into a joint venture. Both BA and American are members of the Oneworld grouping.

Meanwhile, domestic rival China Eastern Airlines Corp. has been seeking closer ties with other SkyTeam members including Delta Air Lines Inc and Air France KLM through mutual stake investments, leaving China Southern in an awkward situation within the alliance.

Even with the proposed departure, SkyTeam will still have two members -- China Eastern and Xiamen Airlines Co. -- in mainland China, poised to become the world’s largest aviation market. Beijing-based Air China Ltd. belongs to the Star Alliance and has a stake in Hong Kong’s Cathay Pacific Airways Ltd., a Oneworld member.

Global airlines are largely grouped into three major alliances -- Star, Oneworld and SkyTeam.

To contact Bloomberg News staff for this story: Dong Lyu in Beijing at dlyu3@bloomberg.net

To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net, Christopher Jasper

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With assistance from Editorial Board