[photopress:sia.jpg,full,alignright]As reported here some weeks ago China Eastern Airlines, the nation’s third-largest carrier, wants to sell a stake to Singapore Airlines, which is seeking better access to the world’s second-largest aviation market. Now it has won preliminary government approval. The sale was approved by the State Administration of State-owned Assets Commission. The airline is still discussing final details with other regulators.
Singapore Airlines and Temasek, the Singapore government investment company, will buy a stake of about 25%. SIA plans to invest in China Eastern to add flights in a market expected to grow fivefold by 2025.
Steven Lim, who helps manage about $300 million at Daiwa SB Investments in Singapore, said, ‘Singapore Airlines is buying market access in China rather than just taking a stake in an airline. The potential in the medium-to-longer term is huge.’
China Eastern expects to complete the sale soon but work on the basis of another two weeks at least. Lei Li, an analyst at China Securities said the deal needs to be sanctioned by at least five departments under the State Council.
This is, in that favorite American business phrase, a ‘win-win’ situation. Singapore gets access to the world’s fastest growing, and potentially the biggest, market. China Eastern gets a class act to show it how to run the airline as an attraction in itself, rather than just as a basic mode of travel.
Source: Shanghai Daily