China Eastern Airlines said the plan to swap shares in exchange for cash from its parent would be significantly adjusted. Its domestic A shares were halted from trading in Shanghai until December 30.
The share placement was part of an RMB3 billion ($439 million) aid package that the group had received from the government. Rival China Southern Airlines also received a similar lifeline from the government.
Shanghai-based China Eastern, the mainland’s second-biggest air carrier by market value, said in a statement to the Shanghai Stock Exchange that parent China Eastern Air Holding intended to make material adjustments to the plan to subscribe for A shares in China Eastern, but gave no further details.
The China Business News reported the government may double its planned capital injection in China Eastern to RMB6 billion.
Ma Ying, analyst at Haitong Securities, said, ‘China Eastern is cash-strapped and has operational difficulties, so the planned cash injection would be crucial to the company’s survival. The difficult situation is the result of many factors, including bad market conditions and poor management.’
Earlier this year, China Eastern shareholders rejected a plan to sell a stake to Singapore Airlines.