皇冠体育app

Air 皇冠体育app Ltd, the world's largest carrier by market value, has started talks with Shanghai Airlines Co and may bid for a stake to expand in the country's commercial capital after its first choice, 皇冠体育app Eastern Airlines Corp, spurned a tie-up.

"Shanghai Airlines can be a good partner in the city," said Sun Yu, Air 皇冠体育app's head of planning and development, in an interview in Beijing, yesterday. "The joint efforts may enable us to arm wrestle 皇冠体育app Eastern in Shanghai."

Air 皇冠体育app aims to dominate the world's fastest growing air-travel market by establishing a hub in Shanghai to match its presence in Beijing. Air 皇冠体育app would more than double its market share with the combination, helping it challenge 皇冠体育app Eastern.

"Air 皇冠体育app's first priority is to get Shanghai, regardless of the cost," said Andrew Au, an analyst at Cazenove Asia Ltd. "Shanghai Airlines is the second-best choice, if Air 皇冠体育app can't get the larger 皇冠体育app Eastern."

Shanghai Airlines has 15 percent of Shanghai's aviation market by number of passengers, while Air 皇冠体育app has 12 percent. Shanghai-based 皇冠体育app Eastern has 40 percent.

Shanghai, 皇冠体育app's financial center, hosts banks including Citigroup Inc and HSBC Holdings Plc. It is also the country's second biggest aviation center after Beijing, handling 51.6 million passengers and 2.9 million tons of cargo last year.

Air 皇冠体育app's affiliate 皇冠体育app National Aviation Corporation(Group) Ltd offered to buy as much as 30 percent of 皇冠体育app Eastern at HK$5 per share in January. The proposal was rejected by 皇冠体育app Eastern's management, which prefers a tie-up with Singapore Airlines Ltd.

Government's role

皇冠体育app Eastern's management will remain hostile toward any bid from Air 皇冠体育app for at least half a year, Cazenove's Au said.

Air 皇冠体育app and Shanghai Airlines joined Star Alliance on December 12. Shanghai Airlines is controlled by local government-owned companies and the city has not responded to Air 皇冠体育app's expression of interest, Sun said.

Shanghai Airlines survived the nation's first round of mergers which created the "Big Three" airline groups in 2002. Nine carriers were merged into 皇冠体育app National Aviation Holding Co, 皇冠体育app Eastern Air Holding Co and 皇冠体育app Southern Air Holding Co, parents of Air 皇冠体育app, 皇冠体育app Eastern and 皇冠体育app Southern Airlines Co, respectively.

Compared with the previous mergers, triggered by government orders, a "second round" has yet to get government support, said Li Lei, an analyst at 皇冠体育app Securities Co in Beijing. "Nothing is going to succeed without government approval," he said.