Source: Reuters Author: Joanne Chiu 04/22/2009
Subject Concerned: Airlines Cargo
Chinese flag carrier Air China sees no fundraising pressure and will spend a total of 30 billion yuan (US$4.39 billion) in capital investment in the three years to 2011.
China National Aviation (CNAC), the parent company of Air China, will also look to market conditions before it decides whether to sell its 12 percent stake in China Eastern Airlines, Kong Dong, Chairman of both CNAC and Air China, said on Apr. 22.
Last year, CNAC proposed to buy additional China Eastern shares at not less than HK$5 each to counter a US$920 million offer by Singapore Airlines Ltd and its parent company for a 24 percent stake in the Shanghai-based company.
SIA's offer was later rejected by China Eastern's shareholders.
Dong also quashed speculation that Air China will merge with two smaller rivals, China Eastern and China Southern Airlines, to help it weather the industry downturn.
"From my point of view the merger of China's (three) airlines is not realistic," he said.
Air China has set up a subsidiary in Shanghai with the aim of boosting its share of the city's aviation market to 20 percent from 14 percent, Kong said.
The company has also moved its air cargo hub to Shanghai, to expand its business in Eastern China.
Air China will cut its 2009 capital spending by up to 30 percent to 9-10 billion yuan, but it continues to expand its capacity. It aimed to maintain capital expenditure at around 10 billion yuan per year from 2009 to 2011.
Shares of the company ended up 4 percent at HK$3.62 on Apr. 22, beating a 2.67 percent drop on the blue-chip Hang Seng Index.