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SHANGHAI—China Eastern Airlines Corp., China’s
third-largest carrier, fell in Hong Kong trading after
an agreement to sell a stake to Singapore Airlines Ltd.
expired.
“We have
lost our best opportunity to improve the company’s
performance and management,” board secretary Luo Zhuping
said by phone from the company’s Shanghai headquarters
Monday. “We feel very disappointed as the deal could
have been the best in the industry.”
The
airline dropped 5.6 percent to HK$2.02 at the 12:30 p.m.
trading break. The carrier has fallen for five days,
losing 23 percent. Its Shanghai stock dropped by the
10-percent limit. The Singapore investment agreement
expired on August 9.
China
Eastern had tried to revive the sale of a 24-percent
stake to Singapore Airlines and Temasek Holdings Pte.
since January when its minority shareholders vetoed the
deal in anticipation of a higher offer from Air China
Ltd. The carrier will continue seeking a strategic
partner, it said in a stock exchange statement over the
weekend.
“The
share sale negotiations are unlikely to resume in the
near future,” said Li Jun, an analyst at Everbright
Securities Co. in Shenzhen. “It’s time for airlines to
retreat from expansion globally.”
Singapore Air will explore other ways of developing the
relationship, it said in an e-mailed statement Sunday
night. The carrier continues to be optimistic about the
prospects for China’s airline industry, it said.
Most of
the institutional investors who voted against the
Singapore Air deal in January have since sold their
China Eastern shares, according to Luo.
Chinese
airlines also fell after an August 8 bomb threat against
an Air China plane flying from Japan compounded fears
that this month’s Olympics will disrupt traffic. The
threat forced one plane to turn round mid-flight and
caused two other flights to be delayed as planes were
searched.
“This
isn’t a good year for airlines and their stocks,” said
Li. “Traffic won’t rebound until the end of the
[Olympics].”
China has tightened visa regulations, cut scheduled flights
at Beijing’s airport and taken other steps to improve
security and ease congestion during the Olympics.
Air
China, the country’s largest international carrier,
slumped 10 percent to 7.82 yuan in Shanghai and 1.1
percent to HK$3.76 in Hong Kong. China Southern Airlines
Co. dropped 9 percent to 6.15 yuan in Shanghai and 5.9
percent to HK$2.71 in Hong Kong.
The big
three Chinese carriers have all slumped more than 65
percent this year in both Shanghai and Hong Kong.
(Bloomberg) |
