China Eastern-Shanghai Air deal moves forward

A proposed merger between China Eastern Airlines and Shanghai Airlines has been approved in principle by the Shanghai government, Reuters reported, citing China Business News. The proposal calls for China Eastern to take a 60% stake in Shanghai Air, followed by a cash injection into China Eastern from the State-owned Assets Supervision and Administration Commission. Spokesmen for both airlines said the carriers had not been informed by the government of any merger proposals or discussed the issue directly with each other. Sources familiar with the matter told Reuters that the government was discussing the possibility of brokering a merger of the two Shanghai-based airlines to create a dominant player with a 60% share of domestic flights in to and from Shanghai.