China Eastern to sell stake to Singapore Air
(Shanghai Daily)Updated: 2007-06-29 13:42
China Eastern Airlines Co, the nation's third-largest
carrier, won preliminary government approval to sell a stake to Singapore
Airlines Ltd, which is seeking better access to the world's second-largest
aviation market.
The sale was approved by the State Administration of State-owned Assets
Commission, Chairman Li Fenghua said at a shareholders' meeting in Shanghai
today. The airline is still discussing final details with other regulators, he
added.
Singapore Airlines and Temasek Holdings Pte., the Singapore government
investment company, will buy a stake of about 25 percent, Li said. The
Singaporean carrier plans to invest in China Eastern to add flights in a market
expected to grow fivefold by 2025.
"Singapore Airlines is buying market access in China rather than just
taking a stake in an airline," said Steven Lim, who helps manage about US$300
million at Daiwa SB Investments in Singapore. "The potential in the
medium-to-longer term is huge."
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The approval procedure will probably take at least another two weeks to
complete, as the deal needs to be sanctioned by at least five departments under
the State Council, said Lei Li, an analyst at China Securities Co.
The Shanghai-based carrier also expects to post its first profit in three
years this year, Chairman Li said. The airline will probably return to profit in
the first half and make a full-year net income of at least 200 million yuan
(US$26 million), he added.
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