China Eastern Airlines yesterday gained shareholders' approval to raise 7 billion yuan (US$1.02 billion) by selling additional shares to replenish working capital.

It will sell 1.35 billion yuan-denominated A shares to 10 institutional investors at 4.75 yuan each and 490 million Hong Kong shares to its wholly owned unit, China Eastern International, at HK$1.40 (18 US cents) apiece.

The money will help reduce the Shanghai-based carrier's debt-to-asset ratio to 94.7 percent and enhance its ability to control risks, it said in a statement yesterday.

China Eastern, the country's third-largest carrier by fleet size, suffered a loss of 14 billion yuan last year but returned to the black in the first half of this year thanks to fuel hedging gains.

"Our target is to significantly reduce losses this year," said Liu Shaoyong, chairman of the carrier, at yesterday's shareholders' meeting.

The airline will hold another meeting next month to seek shareholder approval on its takeover of its smaller rival Shanghai Airlines via a share swap.

The merger will expand China Eastern's market share in Shanghai to more than 50 percent, which will eclipse Air China's 12 percent.

"We have negotiated with government departments and aimed to complete all approval procedures by the end of this year," said Liu.

He added that China Eastern will make a final decision on joining one of the three airline alliances around the end of this year.

China Eastern said earlier that it will reduce plane deliveries this year to 13 from 29 and may also consider scrapping its previous order for nine Boeing 787 Dreamliner aircraft.

(Shanghai Daily September 8, 2009)