A merger between China Eastern Airlines and Shanghai Airlines is possible as it is reported the idea has strong support from the Chinese central and local governments.
The suggestion is that Shanghai Airlines will first get a capital injection from the Shanghai government and then to buy into China Eastern Airlines. Reports from as early as July 2008 suggested the steps towards this integration were taking place.
What makes the whole idea less than certain is the global financial turmoil and downturn of the civil aviation sector. Both Shanghai Airlines and China Eastern Airlines have incurred major losses in the third quarter of this year.
Total net losses of China Eastern Airlines reached RMB2.292 billion in the first nine months of the year. China Eastern Airlines plans to raise RMB7 billion ($1 billion) by selling shares to its state-owned parent company, more than double the amount originally planned, to help it weather a financial crisis.