American Airlines has invested $200 million in China Southern Airlines for a 2.7% stake, indicating that some CEOs are still keen to deal with the world’s second-biggest economy despite protectionist rhetoric in Washington.
The travel industry has been shaken by Donald Trump’s election following his two majority-Muslim-country ban attempts and recent moves to restrict electronic devices from being carried on some international flights.
Industry representatives fear the policies have already discouraged people from visiting America, including from fast-growing economies such as China that provide billions of dollars in export revenue.
Such a risk wasn’t enough to stop American Airlines from pressing ahead with a deal with China’s biggest carrier, indicating a level of confidence that trade ties between the two countries will remain robust.
“We are two of the biggest carriers in the world and our networks are highly complementary, with the potential to offer China Southern and American customers an unmatched range of destinations in two critical markets for business and leisure travelers,” American Airlines president Robert Isom said this morning.
“This investment will allow us to build a relationship that will benefit our teams, the communities we serve and the millions of customers around the globe who travel with us each day,” Isom added.
American Airlines CEO Doug Parker was the only major airline CEO to skip a meeting last month with Trump, citing an existing commitment to address a company conference. His move on China Southern, however, isn’t unusual: in 2015, Delta Airlines paid $450 million for a 3.55% stake in China Eastern Airlines, while United Continental has a partnership with Air China.
Still, the timing of American Airlines’ gambit shouldn’t be lost on an administration that has threatened to impose 45% tariffs on Chinese imports.
“We’re pleased to begin this relationship to better connect two of the world’s largest aviation markets and leading economies,” China Southern Chairman Wang Cheng Shun said.
Apple is among other companies that have recently announced new investments in China, while GE CEO Jeff Immelt said last month that the engineering company—with a presence in 180 countries—can still leverage its scale to grow globally, no matter what government policy it faces. “We see many giving up on globalization; that means more for us,” Immelt said.
American travel groups, meanwhile, remain nervous about Trump’s agenda.
“We continue to hope that highly visible changes to security protocols in the future will be accompanied by a clear message that the government’s intent is not to suppress, but to secure travel, and that legitimate international business and leisure travelers remain welcomed and valued by the United States,” the U.S. Travel Association said in a statement last week.
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