Rumors about the impending merger of two Shanghai-based carriers, China Eastern and Shanghai Airlines are denied by the managements of both the companies.
This time the rumors have been attributed to a journalist who claims to have overheard China Eastern Chairman Liu Shaoyong confirming the news at a recent dinner party. Which is not what one would think of as a solid reliable source.
Yao Jun, industry analyst, China Merchants Securities, said, ‘It is true a merger between the two will be an opportunity for the carriers to get out of the current problems.’
The idea of merging the two airlines was first brought up in 2002 by the Shanghai Municipal Government. The thought was the result would be a superpower local carrier. It is possible but not probable as there are all sorts of complexities involved.
Luo Zhuping, board secretary with China Eastern, said he has not heard of any new development on the merger front, while Xu Junmin, board secretary of Shanghai Airlines denied any knowledge of an impending merger. He said, ‘Our airline has been operating normally as usual.’
That sounds pretty genunine as opposed to the normal PR proforma denial.
China Daily reports that analysts said that there are a number of ways the two carriers could be restructured.
If it is going to happen, it will happen fairly quickly because of the forthcoming World Expo 2010. If they can produce a merger in time, the resultant single airline might benefit from a surge in demand.
Li Lei, aviation analyst, CITIC China Securities, said: "China Eastern currently has a 33% share of the Shanghai market, while Shanghai Airlines holds around 20%. A merger would guarantee the dominant position in Shanghai for the resultant entity."