China Eastern talks up Singapore link
BEIJING – The partnership between China Eastern Airlines and Singapore Airlines will provide necessary financial resources and management expertise to help the Chinese carrier achieve the goal of becoming a hub airline based in Shanghai, insists China Eastern’s president and chairman Li Fenghua.
Li told China Daily the share sale to the Singaporean company will provide sorely needed funding to establish the mainland’s third largest carrier as a credible hub airline in Shanghai.
Currently the Chinese airline lacks management expertise and is weak in product design, which give rise to losses in many of its international flights.
It loses 1 million yuan (US$137,000) on each flight bound for the United States and 3 million yuan (US$410,000) for each flight bound for South Africa because of low passenger loads.
“The cooperation with Singapore Airlines will bring about a better administrative structure to our board of directors,” Li said.
“Singapore Airlines has established the island nation as an international airline hub. As an international hub airline company, Singapore Airlines integrated all its resources and developed a series of products on the back of its own advantages, which could help us in such areas as flight connection and airline network structure,” Li added.
China Eastern’s partnership, to be voted on by shareholders on January 8, has encountered potential obstruction from its largest domestic competitor Air China and its parent China National Aviation Holding Co.
Though Shanghai-based China Eastern is confident Air China, also controlled by the state-owned Assets Supervision and Administration Commission, will eventually approve the deal, it is concerned that minor shareholders, influenced by Air China’s stance, will turn down the deal.
“It’s possible that enough minor shareholders will veto the deal despite a green light from Air China,” Luo Zhuping, board secretary of China Eastern Airlines, said.
“The partnership with Singapore Airlines will help us resolve financial difficulties, improve management structure and product design,” he said. “The goals will be empty talk if we are not well funded.”
Source: China Daily
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