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China Eastern hits back at criticism

China Eastern Airlines yesterday hit back at comments by the parent of rival Air China that a bid by Singapore Airlines (SIA) to acquire a key stake in China Eastern undervalued the carrier.

"We must point out the price of HK$3.80 for the new share issue is reasonable. The price is the result of long-time, market-based talks between China Eastern and SIA," it said in a statement.

Temasek, SIA and the Singapore government-linked investment entity would take a combined 24 percent stake in China Eastern for US$923 million under a preliminary agreement reached in September.

But China National Aviation Corp (Group) Ltd (CNACG), a key China Eastern shareholder, on Tuesday said the deal does not reflect the loss-making airline's fair value and urged further negotiations aimed at a higher price.

The company also said the proposal could hamper cooperation with domestic carriers and the development of China's air industry.

"The alliance with SIA would not hinder cooperation with other domestic carriers in any way ... the theory that it would pose a potential hindrance to industry development is unsupported," China Eastern responded.

China Eastern shareholders including CNACG, which owns 12.07 percent of the carrier's Hong Kong-listed shares, are due to vote on the deal on Tuesday.

Analysts have said that if the deal was voted down, the Air China parent and its partner Hong Kong-based Cathay Pacific, which abandoned a bid for China Eastern in September, may approach the airline once again.

China Eastern said in the statement it so far had not received any competing proposals.
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