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Singapore International Airlines (SIA), and its parent Temasek Holdings, is poised to pay US$930 million for 24 per cent of China Eastern Airlines to extend its own China reach, says a Bloomberg report.
The share is valued at $1.17 billion, given China Eastern's market value of $4.8 billion, said Bloomberg, adding that the deal still had to be approved by regulators.
The transaction would provide SIA greater market access and China Eastern, the mainland's only listed carrier to lose money last year, would make a partner of Asia's most profitable airline, reducing debt and help stave off rivals like Hong Kong's Cathay Pacific and Shanghai's Air China, both seeking a tranche of China's domestic market.
Greg Kuhnert, who manages $1 billion in Asian equities for London's Investec Asset Management, told Bloomberg: "China Eastern is potentially a goldmine for Singapore Airlines. The Chinese airline industry has one of the highest growth rates worldwide."
Chinese air carriers fly 160 million passengers a year, a figure rising 15 per cent year on year, according to China's General Administration of Civil Aviation while the country's economy has risen about 10 per cent a year.
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