China Eastern Airlines (ST: 600115), a leading carrier in the country, confirmed Monday that it plans to merge with smaller rival, Shanghai Airlines (ST: 600591). An insider with China Eastern released that they will absolutely control the holdings of Shanghai Airlines, and the latter will operate as an independent branch company and keep its own brand.

The insider said China Eastern will purchase more than half of Shanghai Airlines stocks through the China Eastern Air Holding Co.. So far, the Shanghai State-owned Assets Supervision and Administration Commission holds 35.73% of the Shanghai Airlines' stocks via the Shanghai Allied Investment Ltd. Co., which is the No. 1 shareholder.

The Shanghai Stock Exchange issued an announcement on June 8, saying that trading in shares of the two companies were suspended for significant issues. Later, the China Eastern confirmed two companies entered into the substantial operating phase on merging. Before this, Board Chairman of China Eastern Airlines, Liu Shaoyong, once said that after merging, the company will move to international capital market.

For more details, please read the full Chinese coverage at:

http://news.xinhuanet.com/fortune/2009-06/10/content_11516448.htm

(China.org.cn June 10, 2009)