China Eastern Airlines shares slump about 8%
Updated: 2008-08-12 07:32
By Lillian Liu(HK Edition)
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Shares in China Eastern Airlines Corp, the country's third-largest carrier, slumped nearly 8 percent in its Hong Kong trading yesterday after the company's agreement to sell stakes to Singapore Airlines Ltd (SIA) expired.
The company's stock continued its decline till last Friday, the day before expiry date, and slid 7.94 percent to HK$1.97 from HK$2.15 as investors' hopes - that the country's most debt-ridden airline will benefit from Singaporean management expertise - were dashed.
The agreement among Singapore Airlines Ltd (SIA), Temasek and China Eastern Airline did not work out as of Aug 9, 2008, so the agreement automatically terminated, the Shanghai-based carrier said in a statement to Hong Kong Stock Exchange.
However, China Eastern Airlines will continue to expand its cooperation with global airlines and will continue to seek strategic investors, it said.
The company believes that introducing strategic investors of world renown into the company is consistent with the interests of the company and its shareholders as a whole, board secretary Luo Zhuping said in a statement.
The company will continue to seek strategic investors and will persist in developing opportunities of business tie-up with strategic investors of world renown, Luo said.
SIA said it will explore other means of developing the relationship despite the expiry of the agreements. And it continues to be optimistic about the prospects of China's airline industry.
Li Jun, an analyst at Everbright Securities, said the share sale negotiations are unlikely to resume in the near future.
SIA and its majority owner Temasek Holdings, Singapore's State-linked investment arm, signed a preliminary deal in September last year to take a 24 percent stake in China Eastern Airline for $920 million; or HK$3.80 a share.
In January this year, the offer failed to win support from China Easter Airline's shareholders, including China National Aviation (CNAC), with many alleging that the stake was being sold too cheaply.
The Shanghai-based airline's share price has fallen more than 72 percent so far this year, after speculators sent its shares above HK$10 late last year.
It is now trading some 32 percent below SIA's original offer.
Air China, the country's largest carrier, slumped 2.36 percent to HK$3.71 in Hong Kong yesterday. China Southern Airlines dropped 6.59 percent to HK$2.69 in Hong Kong.
The big three Chinese carriers have all slumped more than 65 percent this year in both Shanghai and Hong Kong.
(HK Edition 08/12/2008 page2)