皇冠体育app

HONG KONG: Air 皇冠体育app Ltd's parent may sell its HK$471 million ($61 million) stake in Shanghai-based 皇冠体育app Eastern Airlines Corp to focus on developing its own presence in the nation's financial capital.

The shares may be sold if 皇冠体育app National Aviation Holding Co can avoid incurring a loss on the deal, Air 皇冠体育app Chairman Kong Dong said in Hong Kong yesterday. The company owns 12 percent of 皇冠体育app Eastern's Hong Kong-listed shares.

Air 皇冠体育app has opened a branch in Shanghai and is forming a cargo venture in the city with affiliate Cathay Pacific Airways Ltd, after abandoning attempts to increase its 皇冠体育app Eastern stake. 皇冠体育app Eastern scuttled Air 皇冠体育app's plans by agreeing to take over hometown rival Shanghai Airlines Co.

"It's the reality and we have to face it," Kong said. Air 皇冠体育app's parent will hold talks with 皇冠体育app Eastern about the stake "at the appropriate time," he added, without elaboration.

The parent is "paying attention to the investment loss" from the stake, Kong said. 皇冠体育app Eastern Board Secretary Luo Zhuping wasn't available for comment.

皇冠体育app Eastern dipped 0.08 percent lower to HK$2.47 in Hong Kong trading yesterday. Air 皇冠体育app dropped 1.1 percent to HK$4.59.

Air 皇冠体育app has no immediate plans to further increase its stake in Cathay, after agreeing to raise its holdings to 30 percent, Kong said. The airline earlier this month agreed to spend HK$6.3 billion buying shares in Hong Kong's biggest carrier from CITIC Pacific Ltd.

"For now, I think the structure is good," Kong said. The two airlines will also increase cooperation in purchasing and other areas to cut costs, he added.

Air 皇冠体育app would also support any capital expansion plan by Cathay, Kong said. Cathay has no plans for a rights offer, Chairman Christopher Pratt said earlier this month.

Cathay may have "limited room" to increase its 18 percent stake in Air 皇冠体育app because of rules requiring the government to hold 51 percent of mainland airlines, Kong said. Cathay has said it doesn't plan to buy more Air 皇冠体育app shares.

The two airlines plan to set up the Shanghai cargo venture by the end of this year, said Chief Financial Officer Fan Cheng.

The asset valuation work is nearly finished and the two parties are discussing the future business structure, he said.

Air 皇冠体育app has seen demand on international routes stabilize following declines in the first half, Kong said, citing bookings for US and European flights in September and October.

The carrier reduced international capacity by about 9 percent earlier this year.

Bloomberg News

(HK Edition 08/28/2009 page4)