Temasek Holdings to shore up Singapore International's bid for China Eastern
25 May 2007
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.