China Eastern Airlines is preparing for a shareholders' meeting at which partnership with Singapore Airlines will be discussed.
China Eastern president and chairman Li Fenghua said yesterday the company was still keen on the Singaporean carrier becoming a partner.
On the sidelines of the Shanghai municipal committee of the Chinese People's Political Consultative Conference (CPPCC) meeting, Li told China Daily the Shanghai-based airline is continuing its cooperation with Singapore Airlines on a commercial level and the two "are discussing their partnership".
The remarks came after China Eastern accused a proposal by China National Aviation Corp (CNAC), the parent of its biggest domestic rival Air China, of counter-bidding for its shares, of being "informal" and "not conforming to legal procedures".
It is the first time China Eastern has made clear its determination to form a strategic partnership with Singaporean investors since its proposal to sell a 24 percent stake to Singapore Airlines and Temasek, the Singapore government's investment arm, at HK$3.80 (49 cents) per share was rejected at a shareholders' meeting on Jan 8 on the back of CNAC's counteroffer.
Air China and Singapore Airlines declined to comment yesterday.
"(Our partnership with) Singapore Airlines is sure," Li told China Daily.
"Our cooperation on a business level is still going on, and we are in talks.
"The next step is to seek a second chance (for the partnership with Singaporean investors), with support from the State Council and the State-owned Assets Supervision and Administration Commission," Li said.
He declined to disclose whether Singapore Airlines is willing to make an offer higher than that proposed by the CNAC or when the second shareholders' meeting is scheduled.
China Eastern, the mainland's third-largest carrier, needs financial resources and management expertise to enhance its competitiveness.
However, its planned partnership with Singaporean investors - talks have been going on for two years - was rejected by an overwhelming majority of shareholders and raised questions whether State-owned assets were being sold too cheaply.
Li said yesterday he had learned a lesson from the last shareholders' meeting and how to adapt to running a business in the commercial market.
"We were too simple-minded and relied too much on regular practices," he said.
"We thought approval by the authorities would resolve all difficulties. But in the capital market, administrative power does not run through.”
"Shareholders don't trust you. They care only about share prices," he said.
(China Daily January 24, 2008)
