Shanghai-based China Eastern Airlines Corp, the nation's
third-largest carrier, is awaiting approval from the central
government to sell a stake to its Singaporean partner.
Luo Zhuping, board secretary of China Eastern, told China
Daily yesterday that he is not sure how long it's going to take
to get the approval.
"It is a government thing, so it's hard to say," he said.
But Luo revealed that there still seems to be quite a few
technical problems, such as ones regarding laws and
regulations.
Local media reported that China Eastern has submitted a report
to the State-owned Assets Supervision and Administration
Commission, Ministry of Commerce, China Securities Regulatory
Commission and the Civil Aviation Administration of China about
selling 25 percent of its stake to two Singaporean partners -
Singapore Airlines and Temasek Holdings Pte.
Last Friday, China Eastern Chairman Li Fenghua told a
shareholders' meeting that things have been going smoothly for the
company to sell the stake and that there have been no obstacles
from the management.
According to the plan, Singapore Airlines will buy 20 percent of
the stake while its parent company Temasek, a Singapore State-owned
investment company, will buy 5 percent. The total of 25 percent is
the maximum allowed by Chinese law.
Analysts believe the deal will be significant for both the
Chinese and Singaporean sides.
It will help China Eastern out of its financial strains by
bringing management experience from Singapore Airlines, one of the
most profitable airlines in Asia. China Eastern was the only one of
the top three Chinese airlines that lost money last year, posting a
loss of 2.78 billion yuan.
For Singapore Airlines, the deal will provide it with better
access to one of the largest aviation markets in the world.
Singapore Airlines is buying market access in China rather than
just taking a stake in an airline, analysts said.
China Eastern, whose shares have stopped trading in Hong Kong
and Shanghai stock exchanges, has improved its performance so far
this year.
The airline will probably return to profit in the first half of
this year and post full-year net income of at least 200 million
yuan, company chairman Li Fenghua was quoted as saying by
Shanghai Securities News.
(China Daily July 4, 2007)
