More consolidation has hit the bloated Chinese market with China Eastern Airlines' completion of a deal to acquire 40% of Wuhan Airlines, and take management control.
A major reorganisation has been taking place for more than two years, since regulatory authorities called for mergers among the country's airlines, which number more than 30. Early this year government approval was secured for the first phase, under which Air China, China Eastern and China Southern Airlines will acquire seven other state-controlled carriers.
The 'big three' are now stepping up the hunt for partners among second-tier airlines, which include Wuhan.
China Eastern on 16 August signed a formal agreement to acquire 40% of Wuhan, which will result in Wuhan being revamped as China Eastern Airlines Wuhan, operating under the China Eastern name in corporate colours.
Shanghai-based China Eastern will pay 240 million yuan ($29 million) for its stake. The other shareholders are the Wuhan State-owned Assets Office, with 40%, Shanghai Junyao, with 18%, and Wuhan High-technology, with 2%. The new carrier will have a registered capital base of 600 million yuan.
China Eastern will appoint four directors on the 10-member board. It will also appoint a general manager, while the Wuhan State-owned Assets Office will appoint a chairman.
Source: Flight International
