China Eastern says partnership with Singapore Airlines, Temasek 'only option'

China Eastern says partnership with Singapore Airlines, Temasek 'only option'

	Published : Thu, 13 Dec 2007 12:19 By : Agencies Print this Story

HONG KONG (XFN-ASIA) - China Eastern Airlines president Li Fenghua said today that the proposed strategic partnership with Singapore Airlines and Temasek is the 'only and ultimate option' to further its restructuring plans.

Singapore Airlines and Temasek, the investment arm of the Singapore government, reached an agreement with China Eastern in early September to buy a combined 25 pct stake in the airline at 3.80 hkd per share in a deal which won the approval of China's authorities and China Eastern management.

However, speculation about a combined counter bid by Air China and Cathay Pacific as well as the doubling of China Eastern's share price to above 7.50 hkd recently has cast doubt on the deal.

The deal, a result of prolonged discussions between different government agencies, has been approved by the State-owned Assets Supervision and Administration Commission of the State Council - China Eastern's controlling shareholder - Li told reporters at a press briefing here today.

'I am confident the deal will be approved at the shareholders meeting on Jan 8 ', he said.

The deal is meant to enhance the competitiveness of China's airline industry, and takes into account the benefits for consumers, Li said, adding that the deal is more of a government transaction than a corporate action.

'I do not see the possibility of a 'no' vote by shareholders, including China National Aviation Holding Co', he said.

If the deal falls through however, he said that China Eastern will continue to table new proposals through a similar arrangement and asking price until the deal is ultimately approved by shareholders.

Li added that he hopes that China Eastern will be able to raise its market share in Shanghai to above 50 pct from the current 36 pct through future co-operation with Singapore Airlines. But he did not give a specific timetable.

He also said he is optimistic on China Eastern's full-year earnings, and believes it will do better next year.

In late September, Air China and Cathay Pacific abandoned a plan to thwart Singapore Airlines' attempt to buy a stake in China Eastern.

China Eastern closed down 0.95 hkd or 12.70 pct today at 6.53 hkd.

( 1 usd = 7.80 hkd)

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