China Eastern may sell stake to foreign carrier

China Eastern Airlines Corp (東方航空) may announce an agreement on Sunday to sell a stake to Singapore Airlines, a deal that would bring welcome cash for the financially troubled carrier, media reports said yesterday.

Officials Shanghai-based China Eastern's offices confirmed the airline plans a press conference for Sunday at Shanghai's Hongqiao Airport, where the deal reportedly will be signed. But they would give no details.

The state-run Shanghai Securities News and other reports said the deal had received government approval but that some details remained to be worked out. They did not give specifics on the size of stake to be sold or other financial figures.

China Eastern is the nation's third-biggest carrier. Like other major Chinese companies, the airlines are seeking strategic investors to help build their cash bases and upgrade services. But China limits foreign ownership in domestic airlines to less than 50 percent.

Singapore International Airlines spokesman Stephen Forshaw said he could not confirm the reports.

"We have no transaction to announce at this time. If we have a transaction to announce, we shall announce it at the appropriate time," Forshaw said.

"On confirmation, it's not for us to confirm something from the Chinese government," he said.

Earlier said the Chinese airline's board had approved the sale of a 24 percent stake to Singapore Airlines and Singapore's Temasek Holdings, a government investment arm.

Trading China Eastern's Hong Kong and Shanghai-listed shares has been suspended since late May pending the outcome of the negotiations.

Strapped high fuel prices and fierce competition, China Eastern reported net losses in 2005 and last year. The airline recently announced it expects to report an operating profit in the first half of this year.

Caijing Magazine, a major financial journal, reported in June that Singapore International Airlines would pay HK$4.7 billion (US$602 million) for 1.24 billion Hong Kong shares in China Eastern, representing a 15.8 percent stake.

Temasek pay HK$640 million for an 8.2 percent stake, it said.