[photopress:air_china_bid.jpg,full,alignright]The parent company of Air China used a newspaper advertisement to plead with the directors of China Eastern to review its rejection of a proposed alliance between the two carriers.
The advertisement was placed in the South China Morning Post in Hong Kong. (This is not a newspaper which has traditionally given full approval to the actions of the government of China. In the advertisement China National Aviation Corp (CNAC), parent of flagship carrier Air China, insisted its bid was sincere.
The advertisement said, ‘CNAC has been highly sincere in seeking a strategic partnership with China Eastern Airlines.
‘CNAC hopes that the board of directors of China Eastern Airlines will seriously review and give full consideration to the proposal.’
CNAC called on China Eastern to hold a meeting as soon as possible to discuss the details.
China Eastern, the country’s third largest carrier, has once again rejected the alliance and said the bid ‘lacks sincerity, planning and mutual trust and it would be hard to create a basis for cooperation’.
China Eastern added it would continue seeking strategic investors to strengthen its core business which means there may just be a glimmer of hope for the deadlocked plan to tie-in with Singapore Airlines (SIA).
In theory, at least, SIA and Temasek Holdings, Singapore’s state-linked investment firm, signed a preliminary deal in September to take a 24% stake in China Eastern for $923 million.
Minority shareholders rejected the bid after CNAC proposed to buy 2.985 billion new Hong Kong listed shares in China Eastern. China Eastern will receive at least US$1.9 billion US dollars in cash under CNAC’s proposal.
CNAC also suggested the two carriers integrate their cargo business to set up a joint venture and cooperate in codesharing, optimisation of route networks, maintenance and ground service.
What was not said by any party involved was why it was so important. And, in a sense it is simplicity itself. China Eastern has Shanghai sewn up. Air China does not; it has Beijing. If Air China can get a slice of China Eastern then it has the two main points of entry into the country covered. At the same time, Cathay Pacific has a strong interest in Air China which would be transferred to the new alliance.
A footnote: the thought appears to be that SIA would make a massive difference to the inflight service on China Eastern which, in truth, needs all the help it can get.
But Air China has for some time had some of its cabin crew under the training of Cathay Pacific. If there is a difference, it is not noticeable to the eye of a cynical passenger. Eventually it will all settle down and the airlines of China will realize that if they are to do battle in an itnernational sphere then the cabin service has to be up to that of other, competing airlines. At the moment it is not.