China Southern in talks with British Airways on joint venture

China Southern Airlines Co., one of the nation’s top three state carriers, is exploring a joint venture with British Airways for flights between the Asian country and the U.K., according to the company’s global sales director.

Asia’s biggest carrier by fleet size is discussing with IAG SA’s BA on how to extend cooperation beyond the existing basic code- share agreement announced in December, Senior Vice-President Luo Laijin said in an interview Friday at London’s Heathrow Airport. The two are discussing special pro-rate agreements, flight connections from the U.K.’s capital to cities including Manchester, Edinburgh and Glasgow, as well as to some African cities.

“We are developing with British Airways all sorts of different business cooperation and we are going to develop, even deepen our relationship with them,” Luo said. He was speaking at an event to mark the opening of a new route between London and Sanya, a city at the southern tip of China’s Hainan Island.

Chinese carriers are bolstering their global networks with partnerships and investments to serve an aviation market that the International Air Transport Association estimates will surpass the U.S. as the world’s biggest by as early as 2022. With more mainland travelers taking to the skies, China Southern plans to expand its fleet to about 1,000 by 2020, from the current 750 passenger and cargo aircraft it operates.

The Guangzhou-based carrier has said it’s been building its hub and has prioritized subsidizing fares for European travelers. It’s looking to extend partnerships with carriers outside of the three global airline alliances, including its partnership with Air France- KLM, which currently includes a joint venture, Laijun said.

China Southern is also “looking at other opportunities to do stake cooperation” with both U.S. and European airlines beyond the USD200 million stake purchased by American Airlines Group Inc. last year, he said. Net income at the carrier jumped to a record 5.96 billion yuan ($890 million) last year on the back of a stronger yuan. Benjamin Katz, Bloomberg