Air China may block SIA¡¯s deal

It seems very late in the day for this to happen but the story is that Air China, the country’s sole designated flag carrier, may try to derail the plan of Singapore Airlines to buy a stake in China Eastern Airlines. Citigroup suggests it might do this to protect its market position.

Air China’s parent, which holds 11% of China Eastern’s Hong Kong-listed shares, may try to rally support from other shareholders to block the Singapore Airlines deal. The deal needs to receive approval from two-thirds of all minority investors.

Air China may want to combine with China Eastern, as the smaller airline has a 50% share of Shanghai’s air travel market.

China Eastern agreed to sell a combined 24% stake to Singapore Airlines and Temasek Holdings Pte on September 2.

Singapore Airlines and parent Temasek agreed to pay about $918 million to acquire Hong Kong-listed shares of China Eastern at 49 US cents apiece.

It will be a pity if the deal does not go through. China’s airlines desperately need to lift their game when it comes to passenger service. The leader in this area is undoubtedly Singapore Airlines. It could transform China Eastern Airlines and other China airlines would be forced to follow suit. One of the major changes would be in the cabin crew who are, being charitable, not up to internationally accepted standards.