SIA, China Eastern buy into Shanghai air cargo

SINGAPORE AIRLINES (SIA) and China Eastern, have announced they will join together in investing US$2 billion in China Cargo Airlines.

They will also be joined by investment partners China Ocean Shipping Group and Eva Airways, said Bloomberg. Dow Jones reported China Eastern Airlines and China Ocean Shipping will invest in China Cargo Airlines, which will also receive funds from two new shareholders as part of a plan to strengthen China Eastern's cargo operations, the Shanghai carrier said in a statement.

The move will also see the acquisition of two other freight companies and to boost both airlines' presence in China's large air cargo sector.

China Cargo Airlines, the nation's first all-cargo airline, uses China Eastern's routes, and is based at Shanghai's Hongqiao airport, but also operates from Shanghai Pudong.

In April, flag carrier Air China and Hong Kong's Cathay Pacific announced a plan to set up a Shanghai-based cargo joint venture to tap rising air freight between China and its trading partners starting next year.

Guangzhou's China Southern negotiations with Air France-KLM for a joint-venture cargo airline in 2009 ended with the global downturn and does not have an exclusive air freight operation, said Dow Jones.

Shanghai-based China Eastern joins the scheme after its acquisition of Shanghai Airlines and will now begin competing with rival cargo carriers such as Air China and Cathay Pacific from December 31.

Analyst Kelvin Lau, of Daiwa Securities in Hong Kong, told Bloomberg that both firms are going to save on expenses by merging into a single company, as opposed to continuing to operate as three separate entities. He also said that as China's economy and exports continue to grow, imports have also increased.

Forecasters have said that China's foreign trade value could be as high as $2.9 trillion towards the end of 2010. This would make it the world's largest exporter and second biggest importer.
(Source:www.schednet.com)