Temasek Holdings to shore up Singapore International's bid for China Eastern

Singapore: A report in the South China Morning Post suggests that the asking price of a billion-dollars, for 25 per cent of mainland airline China Eastern, may be just out of reach of Singapore International Airline (SIA). According to the story, Singapore's giant investment agency, Temasek Holdings, may now step in to help SIA tide over the shortfall.

Temasek, which holds 56 per cent of SIA, is likely to step in to make up the shortfall as SIA's investment limit in China Eastern is capped at $770 million, the report said.

After initial announcements, SIA and China Eastern officials are now maintaining a studied silence on the issue, but industry observers are confident that the deal will very likely mature. After suffering losses for two years in a row, China Eastern desperately needs the funds, for a third year of losses would see the airline, which is also the mainland's third largest, being de-listed from the Shanghai Stock Exchange.

China Eastern's cup of woes flowed over after mergers with China Northwest Airlines and Yunnan Airlines in 2005. These mergers saw the Shanghai-based carrier taking over ageing aircraft fleets and high debts, all of which, combined with poor management, have seen it drown in a sea of red as far as financial results are concerned.