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China Eastern to sell 25% stake to Singapore Airlines

(AFP)
Updated: 2007-05-23 16:02

China Eastern Airlines is set to sell a 25 percent stake to Singapore Airlines for HK$7.9 billion (US$1 billion) via a placement of new shares, state media said.

China Eastern Airlines, one of China's major carriers, will issue 2.045 billion new Hong Kong-listed H-shares to Singapore Airlines at 3.88 Hong Kong dollars each, the Caijing magazine reported on its website late Tuesday.

Meanwhile, the Chinese airline will also issue 1.267 billion H-shares to its state-owned parent which will remain China Eastern Airlines' largest shareholder with a 51 percent stake after the share offer, the report said.

Trading in shares of Singapore Airlines (SIA) in Singapore, and China Eastern's shares in Hong Kong and Shanghai, was suspended Tuesday amid speculation an announcement could come soon.

Singapore Airlines said in a notice to the Singapore Exchange late Tuesday that it was in "advanced stage of discussions on a potential strategic investment" and an update would be provided as soon as possible.

China Eastern Airlines said in a statement filed with the Shanghai Stock Exchange Wednesday that its shares would continue to be suspended pending a significant announcement.

China Eastern Airlines managed to narrow its net loss by 46 percent in the first quarter of the year to 510.9 million yuan (US$66.3 million).