Singapore Airlines may buy 25% stake of China Eastern

By Shixi (chinadaily.com.cn)
Updated: 2007-05-23 17:27

There is word that Singapore Airlines Ltd. (SIA) may announce plans to invest in China Eastern Airlines Corp. in near future.

Tuesday morning, trading of China Eastern in both H- and A-share markets was suspended. According to the Hongkong stock exchange, China Eastern, the national third-largest carrier will disclose information related to its stock price shortly.

Almost simultaneously, SIA also announced trading of its shares were also temporarily suspended on the Singapore Exchange an hour after opening on the market Tuesday.

According to China Business News, China Eastern Airlines is set to sell a 25 percent stake to Singapore Airlines for HK$7.9 billion (US$1 billion) worth of new shares.

Singapore Airlines said in a notice to the Singapore Exchange late Tuesday that it was in "advanced stages of discussions on a potential strategic investment" and an update would be provided as soon as possible.

China Eastern's H-share price nearly doubled in the past few months this year and closed at HK$3.73 on Monday, rising by 61 percent over the past 30 days. Its A-shares also rose 3.67 percent on Monday, closing at 9.60 yuan.

Analysts pointed out that the strategic move of China Eastern introducing a new investor is beneficial to the Chinese airline, for cooperation with SIA is likely to help it improve operations and raise its exposure in the international market.

On May 9, SIA issued its first formal declaration that they were holding discussions on possible cooperation with China Eastern.

This latest development also fueled the rise of aviation stocks.

Tuesday, H-shares of another domestic carrier, China Southern Airlines rose by 3.37 percent, reaching its 52-week peak at HK$4.85.

There are also reports that Air Emirates and Air France also have plans to buy stakes in China Southern. And negotiations between China Southern and Air France to build joint-venture freight company are also underway.



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