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SHANGHAI: The president of China Eastern Airlines said the nation's third largest carrier was considering a merger with Shanghai Airlines, but still eyeing a tie-up with Singapore Airlines.
State regulators in control of the two carriers were holding the discussions of a possible merger, China Eastern President Cao Jianxiong said on Sunday, according to Dow Jones Newswires.
"The potential merger is being discussed only at the government level at this point," Cao was quoted as saying.
Cao's comments came after state media reported in July that the Chinese government was discussing a possible merger of the two airlines as part of its efforts to consolidate the nation's aviation industry.
Both airlines issued statements at the time denying having merger talks.
Cao said the government planned to first inject capital into Shanghai-based China Eastern and then to merge it with Shanghai Airlines. The combined companies would then consider a potential stake sale to Singapore Airlines.
"Both (deals), with Shanghai Airlines and Singapore Airlines, are possible," Cao was quoted as saying by Dow Jones Newswires.
"But for sure, the merger with Shanghai Airlines will take place before a possible stake sale with Singapore Airlines."
A preliminary deal that would have seen China Eastern sell a 24 percent stake to Singapore and government-linked investment firm Temasek expired in August.
But the carrier said it would continue to seek strategic investors "of world renown".
China Eastern officials would not confirm the report immediately when contacted by AFP on Monday.
Shanghai-listed shares of China Eastern tumbled 3.81 percent in late morning session while Shanghai Airlines lost 1.69 percent, compared with a 1.60 percent fall in the benchmark index.
- AFP/so
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