Cathay Pacific Airways Ltd and the parent company of its Chinese affiliate have backed off from a planned joint bid for shares in China Eastern Airlines Corp, a report carried by The Wall Street Journal network said on Monday.
The move averted a showdown with Singapore Airlines for control of the Chinese mainland's lucrative Shanghai gateway, said the report.
Singapore Airlines agreed earlier this month to buy a 15.7 percent stake in Shanghai-based China Eastern to establish a foothold in China's enormous aviation market.
Singaporean government's investment arm Temasek agreed to simultaneously buy an additional 8.3 percent of China Eastern.
Cathay and Air China were expected to offer a higher premium for China Eastern's shares. Air China affiliate China National Aviation already holds an 11 percent stake in China Eastern.
Singapore Airlines' proposed investment in China Eastern would give it access in Shanghai to a steady supply of Chinese domestic passengers to feed into its extensive international route network, said the report.
The jockeying for a stake in China Eastern has unfolded against a backdrop of torrid growth in Chinese passenger traffic. With China's economy racing ahead at an 11.5 percent annual pace for the first half of the year, ever more Chinese can afford to take to the skies for business and leisure, the report added.
(Xinhua News Agency September 25, 2007)
