The Singapore Airlines bid to buy a 24% stake in China Eastern Airlines is turning out to be as good as an episode of Law and Order.

China National Aviation Holding, the parent company of flag carrier Air China, has said in a statement the US$923.8 million offer by Singapore Airlines and its parent, the government investment arm Temasek Holdings, did not ‘reflect the fair value of China Eastern.’ That is about $3.80 a share.

China Eastern, China’s third-biggest carrier, is listed in Hongkong and it is trading at about 3% more than the Singapore offer which seems pretty close.

Singapore Airlines said the offer was ‘fair and mutually agreed by all parties.’

Speaking for SIA Stephen Forshaw said, ‘It is the maximum justified on the business fundamentals.’ Which makes sense although you have to think of the sentence for a bit if you are not a financial trader.

Take it that China National Aviation Holding, which holds a 12.07% stake in China Eastern will vote against the deal on January 8.

Air China, together with Cathay Pacific Airways, made a higher bid in September last year but the government told it to takes its marbles and play elsewhere. ir China said at the time it would not bid for China Eastern shares for three months.

Neat.

Three months have passed and it is at least theoretically possible it is back in the hunt.

Morgan Stanley noted that any offer by China National Aviation Holding would still need to first gain approval from China’s regulator, which had already approved the Singapore Airlines joint bid.

China National Aviation said it reserves the right to make further proposals for China Eastern ‘which are more in the interests of all shareholders.’

So Air China might make another bid with Cathay Pacific and the future head of the goverment body in China is the current head of Air China

Airlines live in interesting times.
Source: International Herald Tribune

Air China chairman Li Jiaxiang has been appoined chief of China’s civil aviation regulator. This raises some interesting fresh questions about the outcome of a planned linkup between Singapore Airlines and China Eastern Airlines.

Air China has expressed opposition to the deal and its parent will be among the minority shareholders in China Eastern that will vote on the tie-up January 8.

Li Jiaxiang will replace Yang Yuanyuan as the minister of the General Administration of Civil Aviation of China, CAAC. An official at CAAC declined to comment and it was unclear whether Li would assume his new role before the vote by China Eastern’s minority shareholders on the deal with Singapore Airlines.

Air China said Li Jiaxiang will step down as chairman of Air China and as president of its state-owned parent, China National Aviation Holding. It just did not say precisely when this will happen.

This may mean that the SIA/China Eastern Airlines may be voted down.

China Eastern plans to sell a combined 24% stake to Singapore Airlines and its parent, Temasek Holdings, for US$923 million.
Air China has said its parent, CNAHC, which holds a 12.07% stake in China Eastern’s Hong Kong-traded shares, may vote against the deal.

A partnership between China Eastern and Singapore Airlines could pose a major competitive threat and thwart CNAHC’s ambitions of having a significant presence in Shanghai, the booming financial center that is China Eastern’s hub and home base.

Air China’s operations are concentrated around its hub and home base in the capital Beijing.

China Eastern has said the Singapore Air deal is supported by China’s State Council and other government departments. As such, it said it doesn’t expect CNAHC to launch a counterbid for the stake.
Source: CargoNews Asia

European aircraft producer Airbus has authorized a Shenzhen company to be its first maintenance center in Asia.

Lufthansa Technik Shenzhen , not a name that rolls off the tongue, will provide repair and overhaul services in line with Airbus’ requirements, according to an agreement signed by the two companies.

The Shenzhen company has started serving Chinese Airbus operators, helping to cut costs and increase efficiency as they no longer need to send aircraft parts to Europe for repair. It is also expected to provide maintenance services to other customers in the Asia-Pacific region.

The company has received approval from Airbus and the Civil Aviation Administration of China (CAAC) to join the Airbus Spares repair station network. Airbus is trying to set up a comprehensive after-sales service network in China. It has built customer service and technical support stations in 20 cities.

In 1997, it invested US$80 million in an advanced training center in Beijing to help domestic airlines train more than 14,000 pilots, crew members and maintenance technicians.

China’s northern port city Tianjin was selected as the first Airbus overseas assembly plant this year and is expected to turn out its first aircraft at the end of 2008.

Airbus announced last year that it would renew cooperation with the China Aviation Suppliers Import and Export Group on training and support services for another 20 years.
Source: People’s Daily Online

The English phrase for it is a pig’s breakfast.

As reported in these columns the General Administration of Civil Aviation of China (CAAC) has implemented the Reduced Vertical Separation Minimum (RVSM) standard, increasing the flight lanes in the height between 8,400m to 12,500m from the original 7 to 13. This effectively doubles the airspace available.

It provides airline companies more flight route resources (they will be applying for more routes), but also puts a lot of pressure on airports.

Meanwhile, just as this was coming in to play airspace controls disrupted the travel plans of thousands of air passengers traveling to and from Shanghai.

These were controls which appear to have been applied by the General Administration of Civil Aviation (CAAC).

Li Jingao, an official with CAAC East China Air Traffic Management Bureau based in Shanghai. said, ‘The controls will be removed on Sunday.’ And apparently this is the case.

But why were these new controls applied in the first place and what was the reason?

CAAC East China Air Traffic Management Bureau, operating as if it were still in an earlier era, refused to divulge the reason for the imposition of the controls.

All that is known is that it came at the behest of the PLA which controls these matters. At least 40 flights were delayed at Shanghai’s two airports, Pudong and Hongqiao, on Friday, including flights bound for Hong Kong, Harbin, Dalian and Chongqing.

Li Jingao, said, ‘More flights are departing now to make up for the previous delays and this has increased pressure on the airports that are already operating at full capacity.’

More than 150 flights were delayed in Shanghai and about 7,000 passengers were affected during the first two days of the airspace controls.

China is likely to become a major battlefield for cargo plane makers in the next 20 years as the country’s air cargo sector maintains a more than 10%.

China Aviation Industry Corporation I (AVIC I) — one of the country’s leading aircraft manufacturers — said China would need 568 freight carriers by 2026, more than 10 times the size of the present fleet, as its air cargo industry continues to boom.

An AVIC 1 report says that by the end of last year, Chinese airlines were operating 46 freighters with a commercial payload of 2,300 tons,.

Liao Quanwang, vice-president of Aviation Industry Development Research Center of China, which is affiliated to AVIC I, said, ‘China’s air cargo market will maintain an annual growth rate of 10.5% in the next two decades, which is slightly higher than the growth rate of the passenger transport market.’

He said the fast growth is being fueled by China’s booming foreign trade, which provides abundant cargo to air carriers.

Boeing has said China’s air cargo market will continue to lead the world in the next two decades during which its fleet of cargo planes will more than quadruple in size.
Source: China Daily