What next for China Eastern?
SHANGHAI – China Eastern has vowed to reject the overtures of Air China and attempt to forge a relationship with suitor Singapore Airlines.
SIA and Temasek, Singapore’s state-linked investment firm, signed a preliminary deal in September to take a 24 percent stake in China Eastern for US$923 million.
But the bid was in turmoil after China National Aviation Corp (CNAC), the parent of rival airline Air China, on Sunday sought a stake in the Shanghai-based carrier if CEA shareholders voted down the Singaporean deal.
Shareholders did just that on Tuesday although China Eastern chairman Li Fenghua reiterated that the company would not merge or restructure with Air China under any circumstances.
“China Eastern and Air China are at the same level in terms of operation, management and market performance, so we will not consider introducing Air China as our strategic partner no matter how high the price they can offer,” said Li at a press briefing after the shareholders meeting.
Around 77.6 percent of China Eastern’s shareholders voted against selling a stake to Singapore Airlines and a wholly owned subsidiary of Temasek. They claimed the SIA bid was too low.
Cathay Pacific has flagged that it would consider joining Air China in a higher rival bid for China Eastern.
Singapore Airlines said it was “disappointed” after China Eastern shareholders rejected the deal, but it “will continue to support the building of a relationship with China Eastern, noting that the airlines are still mutually willing to develop the relationship”.
CNAC said on Tuesday that it plans to submit a formal offer to China Eastern within two weeks after shareholders rejected the Singaporean deal.
China Eastern accounts for 35 percent of the aviation market in Shanghai, followed by Shanghai Airlines (18 percent) and Air China (12 percent).
Ian Jarrett
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