A possible alliance between Singapore Airlines and China Eastern Airlines Corp got the thumbs-up from analysts yesterday after Singapore's Minister Mentor Lee Kuan Yew revived the idea on Monday.
Mr Lee said the loss-making mainland airline could 'reinvent' itself after learning from SIA, as he resurrected the prospect of new talks on a deal that was scuppered last year.
But first China Eastern must go through a government-sponsored merger with another cash-strapped carrier, Shanghai Airlines.
Analysts said that if SIA became an investor, the mainland government would see it as a way of bailing out both its troubled carriers without the need for more direct capital injections.
'The government has to do something to avoid the bankruptcy of a major carrier. State capital and strategic investors are necessary to get the deal going,' said Citi analyst Ally Ma.
'China Eastern badly needs more money to recover and recapitalise, and Shanghai Airlines needs to be bailed out,' said a finance expert.