China Southern Airlines has confirmed that it is negotiating with American Airlines Group to sell some of its shares to American Airlines for an undisclosed sum.

The company further said that the proposed tie-up could involve a share issue and other forms of cooperation.

Anticipated to enhance American Airlines’ presence in the Chinese market, the deal is subject to shareholder and government approval.

In a filing, China Southern Airlines said: “As of the date of this announcement, the company is in the negotiation of a possible major strategic cooperation (the ‘possible cooperation’) with American Airlines, involving, among others, proposed issue of shares of the company and other business cooperation.

"The company does not have any binding arrangement or definitive agreement in relation to the 'possible cooperation'.”

“The company wishes to emphasise that the 'possible cooperation' is subject to the internal approvals by the board of directors and shareholders (if applicable) of each party, possible approvals by the relevant governmental authorities, and the entering into of certain final legally binding documents by the relevant parties thereto and the terms thereof.

“As of the date of this announcement, the company does not have any binding arrangement or definitive agreement in relation to the 'possible cooperation'.”

If materialised, the planned deal will help American Airlines to become the second US airline to own shares in a Chinese carrier after Delta Air Lines, reported Reuters.

In 2015, Delta Air Lines purchased a 3.55% stake in China Eastern Airlines for $450m.