Air China and Cathay Pacific to partner in bid for China Eastern stake
07 Mar 2008
Beijing: Continuing with the war of nerves that has characterised the battle to acquire a stake in China Eastern Airlines, suitor and current stakeholder Air China now says that it may introduce Hong Kong-based Cathay Pacific Airways as a partner in its bid. According to Air China's acting chairman Kong Dong, Cathay Pacific will provide the required management expertise and international competitiveness that China Eastern wants.
China Eastern's outspoken chairman, Li Fenghua, has said time and again that his airline's attempt to partner with Singapore International Airlines (SIA) was based on sound principles of acquiring management expertise and international experience, which a stake sale to the SIA would provide. He has also asserted that partnering with a mainland carrier, such as Air China, brought no benefits to his airline's operation.
A bid by SIA to pick up a 24 per cent stake in China Eastern was thwarted by shareholders even as Air China's parent, the China National Aviation Holding Co (CNAHC), offered what it said would be a more attractive bid. China Eastern has rejected the bid on technical grounds.
Kong's latest offer to China Eastern, with Cathay Pacific as a likely foreign partner, now seeks to blunt all arguments in favour of SIA.
Kong also said that Air China is sincere about the strategic partnership with China Eastern and even if China Eastern's shares should fall below the previously offered price, it would stick to the plan.
He said that a detailed plan would be put forward if China Eastern should accept the latest proposal.
Meanwhile, Cathay Pacific chairman, Christopher Pratt, who has earlier shown his willingness to provide financial assistance for Air China's bid, said he will back the current plan as well but that the issue would not be resolved in the short term.
Air China, a subsidiary of state-controlled China National Aviation Holding Co, made an offer in January to buy as much as 30 per cent stake of China Eastern at HK$5 apiece. China Eastern, however, rejected this offer on February 26.
