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February 14, 2008 |
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CHINA EASTERN: Citigroup Rates Company at "Buy/High Risk" Citigroup has rated China Eastern Airlines Corporation Limited at "buy/high risk," on the strong possibility of a tie-up with Air China, XFN-ASIA News reports. According to the report, Citigroup said in a note to investors that a stake acquisition in China Eastern by Air China "is the best option for a turnaround of its strategic, operational and financial weakness and to leverage its dominant position in Shanghai." China Eastern's management, the report relates, remains hostile to the acquisition, but Citigroup still believes that it will take place, and that it will have benefits for both companies. Citigroup told the news agency that the company might not be affected by the impact of a US recession, with only 2.5% of its capacity used in flights to the US, but if a downturn in the world economy leads to a "hard landing" in China, airline stocks could suffer. About China Eastern 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-. Fitch said the outlook on the IDRs is stable. Xinhua Far East China Ratings gave the company a BB+ issuer credit rating. |
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