China Eastern Airlines moved a step closer towards buying Shanghai Airlines after getting approval from China's securities regulator to raise 5.57 billion yuan ($815 million) through a share sale.
The airline says in a statement that it would issue 1.44 billion shares to its parent CEA Holding, and carry out this share-placement within six months of getting regulatory approval.
It did not reveal how it would use this money, but China Eastern and Shanghai Airlines shares have been suspended on the Hong Kong and Shanghai stock exchanges since early June after news first emerged that they were in merger talks. At that time, China Eastern said that it was in the process of planning a "material restructuring" of the company and looking at ways to lower its gearing ratio.
Both carriers have received bail-out money from the Chinese government to reduce their debt, and China is keen on a consolidation of its airline sector amid rising costs and increasing losses.
Source: Air Transport Intelligence news
