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January 24, 2008 |
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CHINA EASTERN: CNAC Says it Won't Resubmit Tie-Up Proposal Air China's parent, China National Aviation Corp, said that it will not submit a more detailed proposal for a tie-up with China Eastern Airlines unless China Eastern was willing to sit down at the negotiating table, Reuters reports. The Troubled Company Reporter-Asia Pacific reported on Jan. 22 that China Eastern Airlines said it could not respond to a partnership proposal launched by CNAC on Jan. 18 because the proposal was incomplete and lacked legal validity. According to the TCR-AP reported, China Eastern contended that the CNAC's proposal for "strategic partnership" did not carry the authorization of CNAC's board of directors and that CNAC needs to make a formal, complete proposal. Reuters recounts that CNAC said its proposal could bring China Eastern a cash injection of US$1.9 billion and involve a broad tie-up between the two airlines' operations. CNAC suggested that it and the China Eastern group buy a placement of 2.98 billion new Hong Kong-listed H shares in China Eastern, while the airlines would consolidate their cargo operations and cooperate in areas such as sharing flights, frequent flyer programmes, maintenance and ground service, the report adds. "We submitted our proposal to China Eastern after serious consideration," a CNAC senior executive, who refused to be named, told Reuters. "China Eastern needs time to study it, and we will not come up with a more detailed proposal before it is willing to sit down with us at the negotiating table," the executive added. Reuters relates that CNAC's statement could prolong a stand-off between CNAC and China Eastern, since China Eastern's parent group had already said it will not respond to CNAC's proposal without more details. Headquartered in Shanghai, China, China Eastern Airlines Corporation Limited's -- http://www.ce-air.com -- principal activity is operation of domestic and international commercial air transportation. The Group also is involved in the common aircraft industry. Other activities include general aviation, air catering, advertisement, import and export, equipment manufacturing, real estate, hotel business, finance and training. The fleet includes more than 60 large and medium size airplanes, Airbus and Boeing mostly. Its operation centering from Shanghai to the whole People's Republic of China and linking to Asia, Europe, America and Australia. On April 28, 2006, Fitch Ratings downgraded China Eastern's foreign currency and local currency issuer default ratings to B+ from BB-. The outlook on the IDRs is stable. Xinhua Far East China Ratings gave the company a BB+ issuer credit rating. |
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