In 2015 Delta made a $450 million strategic investment in Shanghai-based China Eastern which has been called the most-subsidized Chinese state-backed airline.
U.S. airline executives think their counterparts at Delta are smart and know what they’re doing, so commonly copy moves made by Delta. In 2017 American Airlines made a strategic investment in China Southern.
In the second quarter American Airlines wrote down the value of its investment in China Southern airlines. In response to a question about financials, the airline told employees “Non-operating special items principally included $52 million of mark-to-market net unrealized losses primarily associated with the company’s equity investment in China Southern Airlines.” $52 million would equate to 26% of the original $200 million investment in China Southern made just two years earlier.
That’s after they introduced reciprocal frequent flyer benefits with the airline and expanded codesharing, and as they consider relocating their Beijing flights to the new farther-out Daxing airport to better connect with China Southern after the new facility comes online.