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China Eastern still awaits nod to sell stake

By Chen Weihua (China Daily)
Updated: 2007-07-04 13:26

Shanghai-basedChina Eastern AirlinesCorp, the nation's third-largest carrier, is awaiting approval from the central government to sell a stake to its Singaporean partner.

Luo Zhuping, board secretary of China Eastern, told China Daily yesterday that he is not sure how long it's going to take to get the approval.

"It is a government thing, so it's hard to say," he said.

But Luo revealed that there still seems to be quite a few technical problems, such as ones regarding laws and regulations.

Local media reported that China Eastern has submitted a report to the State-owned Assets Supervision and Administration Commission,Ministry of Commerce,China Securities Regulatory Commissionand the Civil Aviation Administration of China about selling 25 percent of its stake to two Singaporean partners - Singapore Airlines and Temasek Holdings Pte.

Related readings:  China Eastern approved to sell stake to Singapore Airlines  China Eastern to sell 24% stake to temasek  US$930m likely for China Eastern stake  China Eastern to sell 25% stake to Singapore Airlines

Last Friday, China Eastern Chairman Li Fenghua told a shareholders' meeting that things have been going smoothly for the company to sell the stake and that there have been no obstacles from the management.

According to the plan, Singapore Airlines will buy 20 percent of the stake while its parent company Temasek, a Singapore State-owned investment company, will buy 5 percent. The total of 25 percent is the maximum allowed by Chinese law.

Analysts believe the deal will be significant for both the Chinese and Singaporean sides.

It will help China Eastern out of its financial strains by bringing management experience from Singapore Airlines, one of the most profitable airlines in Asia. China Eastern was the only one of the top three Chinese airlines that lost money last year, posting a loss of 2.78 billion yuan.

For Singapore Airlines, the deal will provide it with better access to one of the largest aviation markets in the world. Singapore Airlines is buying market access in China rather than just taking a stake in an airline, analysts said.

China Eastern, whose shares have stopped trading in Hong Kong andShanghai stock exchanges, has improved its performance so far this year.

The airline will probably return to profit in the first half of this year and post full-year net income of at least 200 million yuan, company chairman Li Fenghua was quoted as saying by Shanghai Securities News.