China Southern Airlines has completed the issuance of 270.6 million Hong Kong-listed shares to American Airlines, making the US carrier an official stakeholder.

The HK$ 1.55 billion ($ 198 million) transaction, which closed on 10 August, gives American a 2.68% stake in the Chinese state-owned carrier. American will also have an observer on China Southern’s board, although they will not hold any voting rights.

American said on 1 August that the deal hinged on approval of a “slot exchange” between the two carriers. Earlier this week, however, the US carrier confirmed plans to launch its new flight from Los Angeles to Beijing in November after securing economically viable slots at the Chinese airport.

The share purchase is the first step in what is expected to be a major strategic alliance between the two carriers.