China Eastern to sell stake to SIA, Temasek | South China Morning Post
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  • Apr 1, 2015
  • Updated: 1:02pm

China Eastern to sell stake to SIA, Temasek

PUBLISHED : Tuesday, 28 August, 2007, 12:00am
UPDATED : Tuesday, 28 August, 2007, 12:00am
 

China Eastern Airlines, the nation's third-largest airline, has received in principle approval from the central government to sell a stake of about 24 per cent to Singapore Airlines and Temasek Holdings for about US$930 million, according to a source.


Singapore Airlines would pay about US$600 million for about 16 per cent of the mainland carrier while Temasek, the investment arm of the Singapore Government, would pay about US$330 million for about 8 per cent, the source said.


Temasek, which owns 54 per cent of Singapore Airlines, manages a S$129 billion (HK$662.52 billion) portfolio of investments that includes holdings in Bank of China and China Construction Bank.


A China Eastern spokesman denied the deal had been approved.


The stake sale will help China Eastern ease its high level of debt and provide Singapore Airlines with increased access to the rapidly growing mainland market.


At the end of March, China Eastern had 24.6 billion yuan in aggregate loans.


SIA operates three daily flights to Shanghai, and, under the open skies agreement between the two destinations, ostensibly faces no limit to growth in that number.


China Eastern shares had risen 119 per cent this year before their trading was suspended on May 22.


The loss-making carrier on July 24 said it expected its earnings for the first half to swing into the black as yuan appreciation reduced the cost of its debt burden.


It had a loss of 1.46 billion yuan for the same period last year and a loss of 550 million yuan for the first three months of this year.


The deal marks the second stake SIA has bought in a mainland airline after investing in Great Wall Airlines through subsidiary SIA Cargo in June last year.


Mainland airlines carried 16.7 per cent more passengers and 15.2 per cent more cargo in the first half, according to figures released by the General Administration of Civil Aviation of China this month.


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