China Eastern Airlines Corp. Ltd. (CEA) has agreed to buy core assets of China Northwest Airlines and Yunnan Airlines from its parent for an initial consideration of 985.69 million yuan (US$119 million).
The airline said in a statement on its website that the deal covers mainly the assets of CEA Northwest and Yunnan's core businesses, their leased assets from third parties, flight routes, staff and main contracts the two companies have signed related to their core businesses.
China Eastern Airlines will first make a payment of 70 percent, or 689.98 million yuan, to its parent, China Eastern Airlines Group, with the remainder due after a detailed audit is completed.
China Eastern Airlines Corp., listed in Shanghai, Hong Kong and New York, will fund the deal with its own capital and loans.
Total assets of CEA Northwest and Yunnan's core businesses stood at 9.54 billion yuan and total liabilities stood at 8.56 billion yuan as of the end of 2004.
China Eastern said earlier the acquisition is expected to expand the group's domestic market share and boost overall revenue.
China Eastern Airlines carried 1.45 million passengers in March, up 1.85 percent year-on-year, with cargo volume growing 9.04 percent year-on-year to 611,300 tons during the month.
China Eastern Airlines Corp. Ltd. swung to a net profit of 514.08 million yuan in 2004 as the strong economy boosted demand for air travel.
(China Daily May 16, 2005)
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