Related News
China Eastern gets cash boost
By Winny Wang |
February 27, 2009, Friday
|
Print Edition
Print Edition
CHINA Eastern Airlines yesterday won approval from shareholders to raise 7 billion yuan (US$1.02 billion) in a stock sale, following the announcement of a similar, 1-billion-yuan cash injection proposed for Shanghai Airlines.
The balance-sheet improvements created by the investments would pave the way for a possible merger between the two Shanghai-based carriers, analysts said.
Under the latest move, China Eastern, the country's third-largest carrier, will issue 1.44 billion Shanghai-listed shares at 3.87 yuan apiece and 1.44 billion Hong Kong shares at 1 yuan each and sell them to its state-run parent.
The cash injections are part of a larger industry effort to shore up the country's ailing airlines. The funds are provided by the airlines' sate-owned parent firms, which pump the money into the carriers through stock purchases.
In addition to the two Shanghai airlines, China Southern Airlines received a 3-billion-yuan financial infusion.
The cash support and other measures including increased spending on aviation infrastructure are needed because the country's airlines reported only single-digit growth in traffic last year for the first time in five years. Industry consolidation is also on the agenda.
"A merger between the two (Shanghai) carriers may happen after the domestic aviation market recovers, as the key task for the carriers is to cut losses," said Li Lei, an analyst at China Securities Co Ltd.
China Eastern Chairman Liu Shaoyong said yesterday that his attitude toward a potential merger between his firm and Shanghai Air has not changed.
He said on February 3 that the two carriers had not discussed a stakes swap but had begun to share resources, and China Eastern was keeping an open attitude toward potential investors.
"The market is filled with speculation that the city government will promote a merger between the two local carriers," said Tao Wei, an analyst at China International Capital Co.
She said that the two carriers' most urgent task prior to such a move is enhancing efficiency.
The balance-sheet improvements created by the investments would pave the way for a possible merger between the two Shanghai-based carriers, analysts said.
Under the latest move, China Eastern, the country's third-largest carrier, will issue 1.44 billion Shanghai-listed shares at 3.87 yuan apiece and 1.44 billion Hong Kong shares at 1 yuan each and sell them to its state-run parent.
The cash injections are part of a larger industry effort to shore up the country's ailing airlines. The funds are provided by the airlines' sate-owned parent firms, which pump the money into the carriers through stock purchases.
In addition to the two Shanghai airlines, China Southern Airlines received a 3-billion-yuan financial infusion.
The cash support and other measures including increased spending on aviation infrastructure are needed because the country's airlines reported only single-digit growth in traffic last year for the first time in five years. Industry consolidation is also on the agenda.
"A merger between the two (Shanghai) carriers may happen after the domestic aviation market recovers, as the key task for the carriers is to cut losses," said Li Lei, an analyst at China Securities Co Ltd.
China Eastern Chairman Liu Shaoyong said yesterday that his attitude toward a potential merger between his firm and Shanghai Air has not changed.
He said on February 3 that the two carriers had not discussed a stakes swap but had begun to share resources, and China Eastern was keeping an open attitude toward potential investors.
"The market is filled with speculation that the city government will promote a merger between the two local carriers," said Tao Wei, an analyst at China International Capital Co.
She said that the two carriers' most urgent task prior to such a move is enhancing efficiency.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
