Chinese Regulators Approve Domestic Airline Merger

Muazzin Mehrban, November 2009

(30 November 2009)

Regulators in China have approved the application by China Eastern Airlines to merge with its smaller rival, Shanghai Airlines. A brief statement by the China Securities Regulatory Commission said the approval was conditional, but did not say what those conditions were, says Reuters.

China Eastern, the country’s third-most valuable airline, said it had one regulatory approval for a share placement, taking it a step closer to a state-backed merger with Shanghai, which is set for completion by the end of this year.

Chinese carriers have been under extreme pressure over the last 12 months, as the slowing economy has hit demand for air travel, pushing its three largest airlines into sustaining a combined loss of over $4bn, forcing Beijing to provide large cash infusions in order to keep them afloat.

However, the country’s aggressive economic stimulus, which has raised consumer confidence, has ensured that its normal growth pattern in the region has been resumed.