China Airlines' search for a foreign airline equity partner is being frustrated by potential bidders' fears of upsetting Beijing and the Taiwanese carrier is likely to find its choice of investors limited to the Chinese mainland.
The quasi-governmental foundation that owns 81 per cent of China Airlines plans to reduce its holding through several disposals, starting with a foreign offering of 10 to 16 per cent. CAL's chairman, Chiang Hung-I, says the airline is looking for 'strategic partnerships' to boost its international presence. Three years ago the carrier tried to push through a similar placement which failed when cross-strait tensions torpedoed a public offering.
But Jim Eckes, managing director of Hong Kong-based consultants Indoswiss Aviation, predicts a repeat situation and believes few foreign carriers will want to take a stake in CAL for fear of vexing Beijing. He dismisses rumours that British Airways might invest, citing the UK carrier's historically 'precarious position' with China.
The acquisitive China National Aviation Corp (see story opposite) or one of China's major airlines is the most likely investor, Eckes predicts. He points to a series of meetings in Taipei last year between senior Chinese aviation officials and CAL management - CAL has also opened a Beijing office. More recently, a further warming of relations was signalled when the CNAC's second most senior official addressed a CAL party in Hong Kong, celebrating 30 years of flights to the UK colony, with a glowing speech about cooperation and friendship with China Airlines. 'For him even to have shown up two years ago would have been remarkable,' says Eckes.
Source: Airline Business
