Singapore Airlines, Temasek sign China Eastern deal

Singapore Airlines, Temasek sign China Eastern deal
Posted: 09 November 2007 1806 hrs

SHANGHAI : Singapore Airlines and investment company Temasek Holdings have signed a final agreement to buy a combined 24 percent stake in China Eastern Airlines, Temasek said Friday.

Upon completion of the transaction, Singapore Airlines will own 15.73 percent in the Shanghai-based carrier, and Temasek 8.27 percent, according to the statement.

The agreement, in the works for months, has been seen as a key event in the battle for Shanghai, which next to Beijing is the most important aviation hub in the rapidly growing Chinese market.

"We believe this partnership...will build on (China Eastern's) strengths to enhance its competitive advantage in the growing China aviation market," said Ong Beng Teck, Temasek's managing director of investment.

He added the transaction would contribute to China Eastern's "financial and operational performance on a sustainable basis".

The deal was expected to make it easier for China Eastern to obtain financing, while the carrier would also learn from Singapore Airlines' management experience, analysts said.

A strategic cooperation agreement between Singapore Airlines and China Eastern sets out areas of cooperation, including flights, operations, service, procurement marketing and training.

The agreement was signed six weeks after a rival bid for China Eastern was launched by Hong Kong-based Cathay Pacific and Air China was abandoned. -AFP/ch