China Eastern gets nod for stake sale
Updated: 2007-08-17 07:14
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China Eastern Airlines Co Ltd expects trading in its shares in Hong Kong and Shanghai to resume before the end of this month as the proposed sale of a minority stake to Singapore Airlines has won the approval of four government agencies.
The four agencies are the State-owned Assets Supervision and Administration Commission, the Ministry of Commerce, the National Development and Reform Commission and the Civil Aviation Administration of China.
China Eastern is still awaiting the final approval of the State Council.
"The terms of the proposed sales are similar to what have been widely reported in the media," Luo Zhuping, board secretary of China Eastern Airlines, said yesterday.
According to the latest reports, Singapore Airlines and Temasek Holdings Pte, the Singapore government's investment company, will buy a combined stake of about 25 percent in China Eastern, China's third-largest carrier, at around HK$3.73 per H share.
The company's A shares, listed in Shanghai, and H shares, listed in Hong Kong, have been suspended from trading for nearly three months since May 22. The A shares closed at 9.6 yuan ($1.26) and H shares closed at HK$3.73 before trading was suspended.
"The top priority for us is to introduce new products from Singapore Airlines to improve client services," said Luo. "There're going to be significant changes to the management of the company," he said.
"There will be a great improvement in the company's decision-making and financial management after the induction of Singapore Airlines representatives into China Eastern's board of directors," Luo said.
Injection of capital as a result of the stake sale is also expected to improve the company's financial status.
Staff training exchanges between China Eastern Airlines and Singapore Airlines have been conducted for a long time. More frequent exchanges are expected after the share sale, Luo said.
Air China has increased its holdings of H shares in China Eastern Airlines four times in just one month, and now accounts for over 8 percent of China Eastern's H shares. The possibility of Air China becoming another major shareholder in China Eastern cannot be ruled out, said Luo.
On July 23, China Eastern Airlines said in a statement to the Shanghai Stock Exchange that it expects profits in the first half, compared with a net loss of 1.46 billion yuan in the same period last year.
"The aviation market in the next half of this year is expected to do better than the first six months, due to strong economic fundamentals, the increasing consumer demand, steady oil prices and renminbi appreciation," said Luo.
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