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SHANGHAI - CHINA Eastern Airlines, the country's third largest carrier, has rejected a proposed alliance with Air China but added it would continue searching for strategic partners.
China Eastern said late Tuesday the proposal from China National Aviation Corp (CNAC), parent of flagship carrier Air China, 'lacks sincerity, planning and mutual trust and it would be hard to create a basis for cooperation'.
'The Board (of directors) has decided that it will not give further consideration to the CNAC Proposal,' it said in a statement to the Shanghai Stock Exchange.
China Eastern added it would continue seeking strategic investors to strengthen its core business in aviation transport, which might offer a glimmer of hope for a deadlocked plan to tie-up with Singapore Airlines (SIA).
'The cooperation between China Eastern and SIA would be better than one with CNAC in terms of mutual complement of flight routes, cost control and synergic effects,' it said, citing financial adviser Shenyin Wanguo Securities.
Singapore Airlines and Temasek Holdings, a Singapore investment agency, signed a preliminary deal in September to take a 24-per cent stake in China Eastern for US$923 million (S$1.3 billion).
But minority shareholders rejected the bid, worth HK$3.80 (S$0.69) per share in January.
'CNAC would not be able to provide the help China Eastern hopes for,' China Eastern said in the statement.
Last month CNAC, parent of Air China, proposed to buy 2.985 billion new Hong Kong listed shares of China Eastern for at least five Hong Kong dollars each after China Eastern's shareholders voted down the deal with SIA.
China Eastern will receive at least HK$14.9 billion in cash under CNAC's proposal.
CNAC also suggested the two carriers integrate their cargo business to set up a joint venture and cooperate in codesharing, optimisation of route network, maintenance and ground service. -- AFP
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