Major CAL stake to be released as airline struggles

The state-run China Aviation Development Foundation (航發會) is planning to sell its stake in China Airlines Co (華航) in two stages within the next two years, amid concerns that the carrier's appalling safety record may scare away potential buyers, a transportation ministry official said.

During the first stage of the share sale, the foundation will sell between 20 percent and 30 percent of its stake in China Airlines by the end of this year, Minister of Transportation and Communications Lin Lin-san (林陵三) said Friday.

The foundation is the airline's biggest shareholder with a 72-percent stake.

Lin, who also doubles as the chairman of the foundation, said the carrier's shares will be sold at a premium price. China Airlines shares were up 0.38 percent to close at NT$13.05 on the TAIEX Friday.

As part of an overhaul of the airline after it suffered its fifth crash in 11 years on May 25, the foundation said it will target "strategic investors" as potential buyers.

Such investors could include domestic and foreign airlines, or investors who are capable of managing an airline, Lin said.

China Development Financial Holding Corp (中華開發金控) has said that it would prefer teaming up with a US or European carrier.

Such a partnership would bring in international management and maintenance expertise, the official said.

China Development Financial Holding Chairman Liu Tai-ying (劉泰英) said in June that British Airways and American Airlines were possible partners.

Grace Fang (方鳳山), China Development's public relations manager, said last month that the company also plans to push for a merger between China Airlines, Far Eastern Air Transport Corp (遠航) and TransAsia Airways Corp (復興).