In the proposal, CNAC said it offered to buy with China Eastern Group its listed arm's 2.98 billion H shares at a price of no lower than HK$5 a share.
Air China, the Beijing-based flagship carrier, would help CEA facilitate construction of a Shanghai aviation hub, and optimise its air routes network and operation of the Pudong and Hongqiao airports, according to the proposal.
CNAC suggested setting up a joint venture to integrate the cargo business of the two state-owned airlines to sharpen their competitive edge. It also suggested the two conduct wide-ranging cooperation, including code-sharing, air routes optimization, maintenance and ground services.
The investment of no less than HK$14.9 billion in cash would reduce CEA's assets-liabilities ratio to 77 percent from 94.3 percent and save it 776 million yuan in debt interest annually, it said in the proposal.
The cooperation would bring the two five billion yuan (US$699 million) in returns annually, including four billion yuan in revenue growth and one billion yuan in cost reduction, CNAC said.
The alliance would help them grasp a larger market share of international flights to and from Beijing and Shanghai and boost the competitiveness of their internationally weak cargo business, CNAC stated.
