Company Watch - China Eastern Airlines

AirGuide Business, Jan 21, 2008

Jan 21, 2008

China s state companies outgrow the family . In the media reports about offshore acquisitions by Chinese companies, the myriad diverse buyers are usually described in headlines and electronic tickers in a single word: China . It is a convenient compression. Autonomous as they may claim to be, every Chinese state enterprise, be it Minmetals, the Bank of China or Shanghai Automotive, answers ultimately to the ruling Communist party. Air China blocked China Eastern s planned tie-up with Singapore Airlines last week by persuading the Shanghai group s minority shareholders to vote against it. Jan 17, 2008

China National Aviation proposes an alliance with China Eastern. China National Aviation, the parent of Air China, has formally proposed a wide-ranging alliance with its rival China Eastern Airlines but said it will not release details of the proposal until Tuesday. China National Aviation said Saturday that it had delivered the proposal to China Eastern's board but would not immediately reveal details because it wanted to coordinate public statements with the other company. Proposing a "strategic partnership" of the airlines, China National Aviation offered to pay "at least" 5 Hong Kong dollars, or 64 U.S. cents, per share for a stake in China Eastern, in line with its previous statements, Shanghai Securities News reported. But the report said the rest of the proposal, which the China Eastern board was believed to be studying, was vague. Spokesmen for the airlines could not be reached for comment on Saturday Jan. 19. Jan 20, 2008

China National Aviation made its proposal 10 days after minority shareholders in China Eastern rejected a $920 million plan for Singapore Airlines and the Singaporean government investment agency, Temasek, to buy 24 percent of China Eastern for 3.80 Hong Kong dollars a share. The newspaper calculated that if China National Aviation now bought the 24 percent stake at 5 dollars plus new shares that China Eastern planned to issue to its parent, it would pay 14.9 billion dollars, or $1.9 billion and end up owning 26.41 percent of China Eastern. The attempts to form an alliance with China Eastern have developed into a struggle affecting the government's plans to restructure China's fast-growing aviation industry. Li Jiaxiang, who left as chairman of Air China this month to head China's civil aviation regulatory commission, has said he wants to create a "super-carrier" to compete with foreign rivals. Jan 20, 2008

China Eastern Says No Further Comment On Tie-Up. China Eastern Airlines said on Tuesday Jan. 15 it would make no further comment on an approach by Air China before that airline made a detailed, public proposal for a tie-up. Last week, China Eastern's minority shareholders overwhelmingly rejected its proposal to sell a 24 percent stake to Singapore Airlines and Singapore state investment agency Temasek for USD$920 million. Jan 16, 2008

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