The partnership between China Eastern Airlines and Singapore
Airlines will provide necessary financial resources and management
expertise to help the Chinese firm achieve the goal of becoming a
hub airline company based in Shanghai, China Eastern's President
and Chairman Li Fenghua said yesterday.
Li told China Daily the share sale to the Singaporean
company will provide the 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 gives rise to losses in many of its
international flights. It loses 1 million yuan on each flight bound
for the United States and 3 million yuan for each bound for South
Africa because of low occupancy rate.
"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."
China Eastern's partnership with the two foreign companies, 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, which holds 12.07
percent of China Eastern's H shares.
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 yesterday.
He has been on frequent roadshows at home and abroad trying to
persuade as many small shareholders as possible.
"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."
With stronger financial support, the company will improve
customer services at both airports and on board. "We can enhance
the chairs, facility, layout and even newspapers at our
international flights."
A stronger China Eastern will also help to establish its home
base as an international airline hub.
(China Daily December 28, 2007)
