A seesaw battle involving China Eastern Airlines can be expected
in the domestic aviation industry this year, with bidders
maintaining a strong interest for a stake in the Shanghai-based
carrier.
Cathay Pacific Airways is likely to help fund any bid proposed
by Air China's parent to seek a tie-up with China Eastern to
maintain its stake in China's flagship carrier, Tony Tyler, the
chief executive of the Hong Kong-based carrier, told the Financial
Times.
Cathay Pacific and Air China own about 17.5 percent of each
other and funding the bid can prevent dilution of its stake "if
they were to issue a load of shares in order to buy China Eastern
or a big chunk of China Eastern," Tyler said.
Tyler said Cathay Pacific and Air China are in talks to
cooperate more closely, including setting up a cargo joint venture
in Shanghai.
Meanwhile, a senior official of Temasek Holdings told the South
China Morning Post that the Singapore government investment arm and
Singapore Airlines remain committed to an alliance with China
Eastern, even if their former deal were to face opposition from
shareholders.
"We are firmly committed to the deal," said Ong Beng Teck,
Temasek's managing director of investment.
They plan to work with China Eastern to win shareholders who are
in favor of Air China's higher offer, but they would not give a
timetable to finalize a deal, the report said.
China National Aviation Corp Group, Air China's parent, proposed
to pay at least HK$5 a share or US$1.9 billion in total for less
than 30 percent in China Eastern after majority shareholders
rejected SIA and Temasek from acquiring a 24-percent stake for
HK$3.80 a share.
CNAC said it is willing to cooperate with China Eastern to snare
a dominant position in the world's second-largest aviation market
even if China Eastern rejects the proposal. It will set up a joint
cargo venture with China Eastern, codeshare and optimize the
carrier's routes, capacity, maintenance and services.
However, China Eastern has said it may not respond to the
proposal because it lacked legal validity.
(Shanghai Daily February 13, 2008)