China Eastern discloses details of alliance proposal
Updated: 2008-01-21 15:41
CNAC stated it would strive to promote business cooperation between Air China and China Eastern no matter whether or when the bid materialized.
Air China, the Beijing-based flag carrier, would help China Eastern facilitate construction of the Shanghai aviation hub, and optimise its air routes network and operation of the Pudong and Hongqiao airports.
CNAC suggested setting up a joint venture to integrate the cargo business at the two State-owned airlines to sharpen their competitive edge. It also suggested the two carry out wide-ranging cooperation, including code-sharing, air routes optimization, maintenance, and ground services.
The investment of no less than HK$14.9 billion (US$1.9 billion) in cash would reduce CEA's assets-liabilities ratio to 77 percent from 94.3 percent and save it 776 million yuan in debt interests per year, it said.
The cooperation would bring the two five billion yuan (US$688.7 million) in returns annually, including four billion yuan in revenues growth and one billion yuan in cost reduction, CNAC added.
The alliance would help them grasp larger market shares of the international flights from and to Beijing and Shanghai and boost the competitiveness of their internationally weak cargo business, CNAC added.
A source with CEA's board told Xinhua last Tuesday the carrier "is willing to study any sincere bid that conforms with legal procedures and is better than Singapore Airline's offer".
The move marked a softening stance, as CEA's chairman Li Fenghua ruled out an alliance with Air China after a shareholder vote on January 8, saying "CEA will never give up no matter how big the obstacle it faces."
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