China Eastern Airlines Corp (中國東方航空) confirmed yesterday it was in long-awaited merger talks with smaller rival Shanghai Airlines Co (上海航空), adding that a detailed plan of the tie-up was expected within 20 days.
Speaking at a shareholders’ meeting in Shanghai, China Eastern chairman Liu Shaoyong (劉紹勇) said members of a joint team of executives had “reached consensus on all major issues” of the merger process.
“The joint task force has started initial preparations and is discussing the form, road map and timetable of the tie-up and restructuring,” he said. “I expect the detailed plan to be released within 20 days.”
Shares in China Eastern Airlines and Shanghai Airlines have been suspended since Monday amid media reports that the government had ordered the two ailing carriers to merge.
Liu said China Eastern would welcome foreign investors coming into the group despite the merger.
“We are not involved in such talks currently,” he told shareholders.
“But ... as long as it is in line with government and industry policies and the interest of shareholders, we would not rule out any [company] in the world, be it a financial [investor] or strategic, domestic or foreign, industrial or non-industrial, we will welcome it.”
The merger is expected to create an aviation company with a dominant position in domestic hub Shanghai, the two carriers’ headquarters, as part of the city’s efforts to gear up for the World Expo that will be held from next May.
The Xinhua news agency has cited unnamed analysts as saying the merger would give the new airline group a 50 percent market share in Shanghai and ease the fierce competition in the local market.
This would help the combined carrier to become more competitive over its major rivals, Air China Ltd (中國國際航空) and China Southern Airlines Co (中國南方航空), Xinhua said.
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