China National Aviation Holding Company (CNAH) will maintain its offer of not less than HKD 5 apiece for China Eastern Airlines Corp. Ltd., despite the latter's shares had fell below HKD 3.8, the offering price of Singapore Airlines and its parent Temasek Holdings Pte.

Driven by this, shares of CEA rose 2.02 percent to close at HKD 3.54 on March 18.

The price fall of CEA shares should be mainly attributed to the depreciated HK stock market, Kong Dong, acting chairman of Air China Ltd. and deputy general manager of CNAH, said on March 18.

CEA, the third largest airline company in China, reported a loss of CNY 3.31 billion for 2006. It expects to introduce some strategic investors to help it run out of the embarrassing condition and fend away competition from both its foreign and domestic peers.

Singapore Airlines and its parent Temasek Holdings Pte, a Singapore state-owned investment company with USD 85 billion in assets, jointly made an offer to take a 24 percent in the Chinese airway for about HKD 7.2 billion, or HKD 3.8 apiece. However, the tender was not accepted by CEA.

Singapore Airlines will continue the talks with the Chinese carrier but declined to make any change on the purchasing price, said Singapore Airlines chairman Chew Choon Seng. Currently, CEA is said to have resumed the talks with Singapore Airlines Ltd., one of the most profitable carriers in Asia that has been in talks with it about the 24 percent stake for about two years.

By gaining a partnership with the company, CEA hopes to enhance its capacity in terms of operation, management, efficiency, profitability and competitiveness.

CNAH, parent of Air China, also showed interest in the 24 percent stake in CEA and plans to take it at the price of not less than HKD 5 apiece. However, its bid was turned down by CEA on February 27.

CNAH did not show enough sincerity, said a top CEA executive, adding the former neither paid a formal visit to CEA nor had been in formal talks with it after the delivery of the tender. Besides, the tender lacks of legal bidding forth so that CNAH could withdraw it or change it at any time.

In responding to the ideas, CNAH said on March 1 that it was sincere in the wish to join hands with CEA.

(USD 1 = CNY 7.08; USD 1 = HKD 7.76)