China Southern Airlines has released details of a new agreement with American Airlines that will see the US airline purchase more than 270 million shares in the Chinese carrier, the South China Morning Post reports.

Business Traveller Asia-Pacific reported last week that there was speculation the two airlines were in advanced talks regarding American Airlines potentially buying a stake in China Southern.

Estimated to be valued at about HK$1.55 billion (US$200 million), the deal was confirmed on Tuesday morning (March 28) in a filing, stating that American Airlines will purchase the more than 270 million shares at a share price of HK$5.74 (US$0.73).

The proceeds from the sale will be used for “supplementing general working capital”, according to China Southern. Meanwhile in a separate exchange filing on Monday night, the airline said the agreement for a “possible strategic cooperation” would also include other as-yet-undetermined business collaboration between the two carriers.

The purchase will give American Airlines a stronger foothold in the Chinese aviation market, which the International Air Transport Association (IATA) predicts will become the world’s largest aviation market by 2024.;