- Online travel services provider to buy 3.55% of carrier
- Deal part of airline's plan to finance purchase of planes
Ctrip.com International Ltd. will spend 3 billion yuan ($463 million) to buy a stake in China Eastern Airlines Corp. as part of a plan by the carrier to help fund purchase of aircraft.
The Shanghai-based provider of online travel services will buy as much as 3.55 percent of the airline at a floor price 6.44 yuan apiece on its A shares, China Eastern’s President Ma Xulun told reporters in Shanghai on Thursday. Trading in the shares of the carrier was suspended for the day in the city and Hong Kong pending the announcement, and will resume Friday.
China Eastern shares fell 1.5 percent in Hong Kong on Wednesday to HK$4.57 and advanced 3.6 percent to 6.62 yuan in Shanghai.
The partnership and the stock purchase will help the nation’s second-largest carrier by passengers to finance a previously announced 15 billion yuan spending program mostly meant to acquire planes. Separately, Ctrip may also seek to buy up to 10 percent in the future, Ma said.
The stake held by the state-owned parent of the airline, China Eastern Air Holding Co., will decrease to about 52 percent from about 62 percent upon dilution as the listed unit sells shares to fund the spending plan, Ma said. Current rules prohibit the parent’s stake to drop below 50 percent, he said.
Ctrip and China Eastern Air Holding will cooperate on sectors including low-cost airline and e-commerce, they said in a statement released earlier.
— With assistance by Gregory Turk