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Title:What Lays Ahead for China Eastern?
Post 1 What Lays Ahead for China Eastern? Dec 24,07 02:53 PM

The deal between China Eastern and Singapore Airlines/Temasek Holdings, which sees the Singapore-based firms to take a total of 24% stake in the weakest of China"s "Big 3" (Air China, China Southern and China Eastern) at a cost of US$918 million (HK$3.80 apiece), is due to be decided by minority shareholders at an extraordinary general meeting to be held on January 8.

With China Eastern firmly urging all minority shareholders to support a China Eastern/SIA partnership, Singapore Airlines saying its offer can go no higher while Air China, which market rumours and news reports suggesting may make every effort to object the deal, seems to be surrounded by rather confusing and conflicting info on its intention in regard to the deal, the question of what lays ahead for China Eastern doubtlessly comes up in many people"s mind.

Unlike the cross-shareholding that took place between Air China and Cathay Pacific Airways, which few people disagreed with the idea, people are largely divided on the deal between China Eastern and SIA/Temasek. From airline executives and stock analysts to fund managers and media reporters, opinions range from complete objection of the deal to full support of SIA/Temasek becoming a stakeholder in China Eastern.

Some people say HK$3.80 apiece is a price tag too low and letting such a deal goes ahead is disgracefully selling "state assets" cheap as chips, and there are also concerns that the deal may give Singapore Airlines almost direct access to China"s major air transport market with some analysts doubt whether such a partnership can effectively turn China Eastern around instead of a non-effective capital injection. However, supporters of the deal argue that SIA/Temasek will bring not only capitals but also world-class managerial expertises and other resources to re-shape the airline into one of top carriers worldwide.

So, what"s your view on this topic? All constructive discussions are welcomed (Please respect the viewpoint of other forum users, no abusive, offensive, unlawful and/or political comments are tolerated).

Related News (Dec. 1 - Dec. 30, 2007):

For earlier news articles, please visit http://en.carnoc.com/cache/type_china.html

[This post was last edited by CARNOC_EN at 12/31/07 11:56]

master(12/24/07 16:24)
Post 2 Re:What Lays Ahead for China Eastern? 2007-12-24 22:32:51.0
If I am a small shareholder of MU, I will not agree the deal. Apparently, the deal is going to hurt the benefit of minority shareholders. But I hold nothing regarding MU.

If I am in the management level of MU, I will definitely push the deal going ahead. Just because I don"t want to be working in CA or other airlines. But I manage nothing in MU.

Fortunately, no matter CA/CX buy MU, or SQ invests MU, MU will always need IT service, that"s my business.... haha... But personally speaking, I"d like to work for a CHINESE airlines, not for a SEMI-Chinese airlines.master(12/24/07 22:54)
CARNOC_EN(01/03/08 00:54)
Post 3 Re:What Lays Ahead for China Eastern? 2007-12-25 00:06:36.0
As some analysts previously pointed out that a China Eastern (MU)/Singapore Airlines (SQ) alliance may not be as constructive as a cross-shareholding partnership between Air China (CA) and Cathay Pacific (CX) as they believe workplace cultures and management practices are of more similar nature amongst CA/CX than MU/SQ so that CA/CX co-operation may bear more fruit.

In addition, it is also a concern as a number of stock analysts mentioned that CA/CX partnership would be more effective as it"s based on cross-shareholding instead of MU/SQ co-operation, which only sees SQ holding stake in MU but not vice versa, thus MU and SQ are not co-operating on a fair basis.

However, I understand the view that MU/SQ co-operation may be a better solution than CA gaining major stake in or to merger with MU from the perspective of consumers as MU/SQ partnership is likely to keep some competitions that may ensure the existance of competitive airfares and reasonable product/service qualities.

Anyway, let us wait and see what happens eventually...master(12/25/07 20:15)
CARNOC_EN(01/03/08 00:55)
Post 4 Re:What Lays Ahead for China Eastern? 2007-12-28 00:52:13.0

Being a consumer, I am sure no-one wants to see less competition on the market, thus a merged super-carrier by whoever is of very few benefits to the public, and I don"t see how such environment may enhance the "catching up" process of any Chinese airlines.

On the other hand, I also doubt the effectiveness of partnership as proposed by China Eastern and Singapore Airlines/Temasek. I don"t believe giving money, carrying out various co-operation in certain aspects and exchanging few executives can turn China Eastern around. China Eastern needs a serious overhaul.

master(12/29/07 17:55)
CARNOC_EN(01/03/08 00:55)
Post 5 Re:What Lays Ahead for China Eastern? 2007-12-30 14:14:20.0

As much as I like Singapore Airlines and its good per锛︼集锛诧辑ance in terms of profitability, the fact remains that most previous investments made by Singapore Airlines produced few better-than-expectation results for the company. So, I am still in doubt whether will investing in China Eastern bring good returns to SQ?

Nevertheless, I agree with some earlier posts that I don"t personally support Air China or any other Chinese carrier to merger with China Eastern as this would effectively reduce competitions and this would be absolutely nightmare for the general public and frequent flyers.

master(12/30/07 22:04)
CARNOC_EN(01/03/08 00:55)
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