China Eastern Airlines (CEA) has softened its stance on the
impossibility of considering a bid from Air China's parent company
for partnership with the country's flagship carrier.
CEA said on Monday that it would "seriously consider" the bid
from China National Aviation Holding Company (CNAHC), the
Beijing News reported on Tuesday.
A source with the board of CEA's listing arm told Xinhua on
Tuesday that CEA "is willing to study any sincere bid that conforms
to legal procedures and is better than Singapore Airline's
offer".
Industry observers here said a "price war" between CNAHC and
Singapore Airlines (SIA) was likely.
On Jan. 8, CEA said it would not merge with, or become a
strategic partner of Air China despite its failure to secure
shareholder support for a proposed sale of a 24-percent stake to
SIA and Lentor Investment Pte Ltd., a wholly owned subsidiary of
Singapore government investment company Temasek, at 3.8 HK dollars
(52 U.S. cents) per share.
Many believed the failure was because the offer was too low.
On Jan. 6, CNAHC, which already owns 12.07 percent of CEA,
announced that it was willing to make a higher offer of five HK
dollars per share.
"CEA keeps exchanging views with SIA every day," Luo Zhuping,
secretary to the CEA chairman, was quoted as saying by the
Beijing News.
According to the newspaper, SIA sources had said it would not
raise the offer, but stressed that it would continue to pursue
establishing a relationship with CEA.
Luo said CNAHC's announcement was raising market expectations
over the price of CEA's secondary public offering, adding the
Shanghai-based airline would be waiting for CNAHC to advance a
detailed offer.
A CNAHC source said on condition of anonymity that the company
would put forward a new offer in one week.
Luo declined to comment on the possibility for a "price
war".
Observers said Air China would try desperately to gain an
advantage in an important international aviation hub like
Shanghai.
CEA accounts for 35 percent of the aviation market in Shanghai,
followed by Shanghai Airlines (18 percent) and Air China (12
percent).
But Air China's market share was widely expected to soar to 50
percent if it succeeded in merging with CEA.
(Xinhua News Agency January 15, 2008)
