Responding to CEA's refusal to give consideration to an ally with Air China, the official said whether the counter-offer could be accepted would be based on how reasonable and exercisable the offer was and how best it represented the interests of the nation's aviation sector.

Hong Kong-based CNAC said last week SIA's offer price doesn't reflect CEA's fair value. The deal was unfair to other shareholders and domestic airlines as it included anti-dilution rights and a non-competition clause.

The offer price greatly underestimated CEA's profitability in the future in light of the nation's aviation boom and its dominant market share in Shanghai, a mutual fund manager, whose firm held Air China, CEA and China Southern stakes, told Xinhua on condition of anonymity.

CEA had earned 1.04 billion yuan ($143 million) in net profit in the first three quarters of 2007, compared with a loss of 2.78 billion yuan in 2006.