China Eastern Airlines moving forward with cargo merger

China Eastern Airlines is moving forward with the integration of its China Cargo Airlines subsidiary and the cargo subsidiary of merger partner Shanghai Airlines, Shanghai Airlines Cargo International, according to CEA GM Ma Xulun. CEA acquired SAL last year (ATW Daily News, Dec. 1, 2009). Ma said the companies are in discussions on how to apportion the original shareholders' respective shareholdings in the combined cargo company. He revealed that the investors, including China Ocean Shipping Co. and EVA Air, are reluctant to sell their stakes. CEA Chairman Liu Shaoyong told ATW previously that CEA expects to introduce a strategic investor for its cargo subsidiary this year, with implications for the holdings of China Ocean and EVA.

But Ma rejected widespread speculation that the cargo operations of China's big three carriers will be merged into a single freight airline. "Currently we are still busy with our internal cargo merger," he said. He pointed out that CEA has completed its integration with SAL in the areas of marketing, MRO, ground service and IT. The merger is expected to save CNY680 million ($99.9 million) annually. Owing to the synergy effect and strong domestic market rebound, CEA is expected to report a bigger profit for the first half of this year than in the year-ago period when it earned CNY1.173 billion.