Manchester airport bosses have flown to China in a bid to secure direct routes to Shanghai and Beijing.

You can argue either way but Manchester or Birmingham is Britain’s second city. Both claim the title. Many experienced travelers when going to Britain prefer to fly in to Manchester as an alternative to the ill-managed hell-hole that is Heathrow at London. Manchester Airport managing director Andrew Cornish met Air China officials to discuss the possible air link this week.

Last September the Civil Aviation Administration of China announced it had ‘approved’ 27 new routes to Europe, one of which was a daily route to Manchester.

CAAC said services would start in 2009 but no dates have yet been set and no further announcements have been made about when the service will start.

Manchester airport would seriously like it to happen because its passenger numbers have stagnated to around 22 million in the last few years.

Manchester Airport Group is also in talks with a number of other Far East carriers and is waiting to discover whether Malaysian low cost carrier Air Asia X will start flights from Kuala Lumpur to Manchester in the last quarter of 2008.

Earlier this year the airline said aircraft shortages might jeopardize these plans.
Source: Crain’s Manchester Business

China Eastern Airlines, Shanghai’s biggest carrier, put a spurt on in the stock market amid speculation — the stock market being the biggest purveyor and believer in gossip of any institution — it may combine with smaller rival Shanghai Airlines (some of the crew seen in this illustration).

China’s third-largest carrier jumped 6.26% to close at RMB10.69, after climbing by as much as the 10% daily limit. Shanghai Airlines gained 0.5% to close at RMB8.02.

It is unusual for rumors to have a sound basis for thinking it. But this one has its reasons.

A tie-up with Shanghai Airlines would raise China Eastern’s market share in China’s commercial capital to 55%, helping it compete with larger rivals Air China and China Southern. The carrier is also seeking funds to cut debt and improve its operations.

Shanghai Airlines is controlled by the city’s government, while China Eastern is majority-owned by the state government.

Chairman Li Fenghua earlier this month said China Eastern wants to raise RMB15 billion ($2.1 billion) for new planes and training. He said the company plans to reach the target by reviving the sale of a stake to Singapore Airlines, by tapping capital markets and through government subsidies.

The airline’s minority shareholders vetoed the sale of a stake to the Singaporean carrier and its parent Temasek in January in anticipation of a higher offer from Air China.

What will happen now? Your guess is as good as anyone’s. Probably better.

What can be safely said is that China Eastern needs to get its debt sorted out and it desperately needs to improve its customer service at every level. Whether it buys Shanghai Airlines or not is a comparatively trivial business decision compared to those two major tasks.
Source: Bloomberg

Air China said it carried 2.91 million passengers in April, down 1.7% year-on-year. And it carried 11.22 million passengers in the first four months of 2008, up 3.7% year-on-year.

The overall passenger load factor was 76.8% in April, down 0.7 percentage point year-on-year, while the overall passenger load factor for the first four months was 77%, up 1.6 percentage points.

Air China carried 79,138 tons of cargo in April, down 4% from a year earlier, and a total of 299,135 tons for the first four months, down 0.1%.

Cargo load factor for April was 59.4%, up 6.2 percentage points, while the load factor for the first four months was 57.1%, up 5.5 percentage points.

While these are not figures to have people crying in their soup they are not overly-encouraging as a trend.
Source: Trading Markets

Chairman Li Fenghua said China Eastern Airlines is still in talks to sell a stake to Singapore Airlines and it is very likely the two carriers will complete a deal.

No date was given for the end of this continuing soap opera by Chairman Li Fenghua said it would have to take a back seat to the more pressing priorities of relief efforts after this week’s devastating earthquake in southwest China and preparations for the Beijing Olympic Games in August. So do not expect it to happen Real Soon Now. (This last phrase is very common in the IT industry where a new product may happen but do not hold your breath.)

In January, China Eastern’s minority shareholders rejected its proposal to sell a 24% stake to Singapore Air and Singapore state investment agency Temasek for $920 million.

The thumbs-down came after the parent of Air China expressed interest in a tie-up with China Eastern, which the Shanghai-based airline rejected.

Chairman Li Fenghua also said China Eastern is making preparations to open an office in Taiwan in anticipation of the opening of direct flights across the Taiwan strait. (Note the illustrations are of hostesses from each of the airlines. Relevant and a lot more pleasant to look at than most aircraft.)
Source: Reuters

It is a big ask. China Eastern Airlines, the most indebted of China’s big three airlines, aims to raise at least RMB15 billion ($2.1 billion) for new planes and training to help it compete with Air China and Cathay Pacific.

China Eastern Chairman Li Fenghua said in an interview, ‘If we can get more, it’ll be even better.’

Li plans to reach his target by reviving the sale of a stake to Singapore Airlines, by tapping capital markets and through subsidies from the government, which owns part of the carrier. It all seems a trifle difficult to envisage.

China Eastern’s minority shareholders vetoed a tie-up with Singapore Air in January after the parent of Air China pledged to make a higher offer.

But Jack Xu, an analyst at Sinopac Securities, said, ‘The government won’t sit and watch its own company go bankrupt. China Eastern will have an opportunity to resubmit the Singapore deal this year.’

He rates the carrier ‘outperform’ which seems a tad optimistic given the recorded losses
Shanghai-based China Eastern still aims to raise $1.5 billion selling shares to Singapore Air, Temasek Holdings, the city-state’s sovereign wealth fund, and to its own state-controlled parent, China Eastern Air Holding.

China Eastern Chairman Li Fenghua, seen in this illustration said, ‘There’s no change in our plan to tie up with Singapore Airlines.’

Chew Choon Seng, chief executive officer of Singapore Airlines, said the two carriers are currently discussing commercial cooperation such as cross-selling tickets rather than an equity link. He wisely declined to say whether a tie-up is still being actively pursued.

China Eastern will spend 80% of the RMB15 billion on aircraft, with most of the rest going toward staff training.

The airline plans to add 17 Airbus SAS and two Boeing aircraft this year. It added 20 aircraft in 2007, expanding its fleet to 223. China Southern added 23 aircraft last year and Air China got 29.

The carrier filled 73.6% of its available seats in 2007. Passenger numbers rose 11% to 39.2 million, while cargo volume climbed 6.7% to 939,700 metric tons. This year, freight may jump 14% to 1.07 million tons.
Source: Bloomberg