Tue, Oct 21, 2003 - Page 10 News List

Government still seeking investor for stake in CAL

BLOOMBERG AND AFP , TAIPEI

The government is seeking a strategic investor to buy a 36 percent stake in China Airlines Co (華航) by the end of the year.

The state-backed China Aviation Development Foundation (航發會), which holds about 71 percent of China Airlines, expects to sell its stake at a price higher than the stock's net worth of about NT$17 a share, said Lin Chun-cheng (林純正), the agency's chief secretary.

China Airlines shares rose 5.4 percent to close at NT$15.60 yesterday.

The government has been trying to revive a plan to sell some of its stake in the airline since 1998. China Airlines has been trying to polish its image after suffering its fifth crash in 11 years in May last year.

"The quality of the airline has repeatedly been in doubt because of the perceived government influence," Lin said. "It's a consensus that the government should intervene less in the airline's management."

The foundation, chaired by Minister of Transportation and Communications Lin Ling-san (林陵三), will ask for bids after a board of directors' meeting to approve the sale conditions, Lin Chun-cheng said.

Singapore Airlines Ltd denied a Chinese-language newspaper report yesterday that it was interested in buying the stake.

The paper said that Singapore Airlines could become the biggest shareholder in China Airlines if it bought the stake. Singapore Airlines hoped a strategic partnership with China Airlines would help reduce operating costs and boost efficiency, it added.

Singapore Air expressed an interest in buying a stake about three years ago, Lin Chun-cheng said, adding he wasn't aware of any current interest in a purchase from the Southeast Asian carrier.

In 1998, Singapore Airlines signed a memorandum of understanding with the Taiwanese carrier on the acquisition of a 25 percent stake but the deal fell through because of concerns of the state losing control of China Airlines.

"The timing for the sale is not very good given the poor financial conditions of many airlines following the devastating effect of SARS," a China Airlines official said without giving details of the planned sale.

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