HONG KONG – Cathay Pacific has moved to foil the attempt by Singapore Airlines to take a 24 percent stake in China Eastern, China’s No 3 airline.
A day before China Eastern shareholders were due to vote on the Singapore Airlines/Temasek joint bid, Cathay said it would consider joining Air China in a higher rival bid.
Air China’s parent, China National Aviation Corp (Group) Ltd (CNACG), has been looking to block the US$920 million Singapore Airlines bid and believes a Cathay-Air China partnership would be its best option.
Analysts at the Centre for Asia Pacific Aviation said, “Any CNACG-led bid – which Cathay Pacific and Air China would almost certainly join – would result not in the turnaround of China Eastern over the long-term, but its likely absorption and disappearance.
“At stake is the crucial Shanghai hub, where Air China is seeking to build its presence, and the highly lucrative Hong Kong-Shanghai route, which will liberalise from the end of March 2008 under the recently expanded Hong Kong SAR-Mainland bilateral air services agreement.”
