China Eastern Airlines announced that it has a very positive outlook about its partnership with Singapore Airlines. The company plans to increase its market share in the ‘Shanghai hub’ from 36% to 50%. It also expects to increase its fleet size from 209 aircrafts to 322 aircrafts by 2010. It announced its plan to establish a new hangar complex at Shanghai Pudong International Airport, to prepare for its future fleet expansion.
Cathay Pacific and China National Aviation Holding (Air China’s parent company) announced that they will not purchase China Eastern Airlines shares. Cathay Pacific had earlier announced that it will purchase the shares of China eastern Airlines and it was being speculated that the move was to prevent Singapore Airlines from entering the Chinese aviation market.
Air China is expected to counter bid Singapore Airlines’ bid of $923 million for the acquisition of China Eastern Airlines. Earlier, Singapore Airlines, along with its parent company Temasek Holdings had agreed to take 24 percent stake in China Eastern Airlines. The expectation of a counter bid led to an increase in the stock price of China Eastern Airlines during the last two days.
Singapore Airlines and its parent company Temasek Holding bought 24 percent stake in China Eastern Airlines for $923 million. The Chinese government will retain 51 percent stake in the company. Singapore Airlines has the right to appoint three members in the 14-member China Eastern Airlines Board.
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