On Jan. 7, Cathay Pacific Airways said it will "seriously consider" joining China National Aviation Corp, the parent company of Air China, to make a second counter bid for a stake in China Eastern Airlines if China Eastern's pending partnership with Singapore Airlines is derailed by minority shareholders on Jan. 8.

On Jan. 7, China Eastern's Hong Kong-traded shares fell 3.76 percent to close at HK$6.66 as the airline prepared to seek shareholders' approval to sell a 24 percent stake to SIA and its parent company, Temasek Holdings, for HK$7.2 billion, or HK$3.80 per share.

CNAC said on Jan. 7 it would offer not less than HK$5 per share for a larger stake in China Eastern if the Singaporean proposal is defeated.

CNAC currently holds 12.07 percent of China Eastern's H shares. At HK$5 a share, it would cost HK$9.43 billion for a further 24 percent stake.

CNAC and Cathay first attempted a joint bid on Sep. 24, 2007 - helping lift China Eastern's H shares to a record HK$10.50 - before withdrawing their offer with the promise of not making another offer for three months.

According to a Sina Finance survey, nearly 77 percent of 44,690 respondents said China Eastern should merge with Air China.

"We believe CNAC's potential counter offer will lead to renewed expectations in the market that a better offer would emerge," said Daiwa analyst Kelvin Lau. "However, there is a chance that minority shareholders would receive nothing if the deal is voted down, at least in the near term."

According to Citi, China Eastern's institutional investors of H shares include Barclays, with a 5.97 percent stake; followed by JPMorgan at 5.04 percent; Citadel Investment with 5.02 percent; Invesco Hong Kong with 5.01 percent; and UBS with 4.51 percent.

China Eastern must get shareholders representing two-thirds of its Hong Kong-listed shares to vote for the deal with Singapore Airlines and Temasek, and two-thirds of holders of its mainland-listed A shares. Parent company China Eastern Air Holding Co, which holds 14 percent of the H shares, cannot participate in the voting.

Cathay Pacific shares closed at HK$20 on Jan. 7.