SQ452 From United States, joined Apr 2004, 1030 posts, RR: 0 Posted (2 years 2 months 2 weeks 3 hours ago) and read 1615 times:
Well everyone, get ready, we have not had an SQ vs. CX battle for a while now! Read an article just now that it will be reported tomorrow that CX will try to "block" SQ from gaining a foothold in China. A nice little $4 bln endeavor possibly. Read the article here:
HONG KONG (AFP) - Hong Kong carrier Cathay Pacific will launch a four-billion-dollar attempt to block Singapore Airlines' bid to gain a foothold in the booming Chinese aviation market, reports said Saturday.
Citing unnamed sources, Hong Kong's South China Morning Post said Cathay Pacific would seek to buy a significant stake in China Eastern Airlines. That stake would be worth four billion dollars, Britain's Daily Telegraph said.
The shareholding would then be used to try and scupper the Singaporean carrier's own plan to acquire a key stake in China Eastern, the Post said.
Cathay would use it alliance with Air China, China's largest airline which holds 11 percent of China Eastern, to block Singapore Airlines' plan at a December shareholder meeting.
Singapore Airlines and the city-state's Temasek Holdings said earlier this month that they planned to buy a combined 24 percent stake in struggling China Eastern for 923 million US dollars.
Analysts have said the deal would offer Singapore Airlines, among the world's most profitable carriers, a foothold in the Chinese aviation market.
The deal requires the support of two-thirds of minority shareholders, the Post said.
China Eastern was based in Shanghai, which could have a growing role as an international aviation hub, and flew between Hong Kong and Shanghai, it added.
Cathay's proposal was still be worked on, the Daily Telegraph said citing unnamed sources.
"There are still a lot of moving parts," one person close to the situation was quoted as saying.
Cathay Pacific is expected to make a statement as early as Monday to the Hong Kong stock exchange after its shares were suspended Friday pending a price-sensitive proposed transaction.
The airline's stock hit an all-time high of 23.05 Hong Kong dollars (3.0 US dollars) on Friday. China Eastern's shares closed up 12.4 percent. -AFP
I guess CX feels that SQ is encroaching on their "turf" (not really their turf anyway). This is going to be interesting, but I doubt CX will be successful cause SQ will fight this one tooth and nail. Thoughts?
Keesje From Netherlands, joined Apr 2001, 9916 posts, RR: 52 Reply 1, posted (2 years 2 months 1 week 6 days 2 hours ago) and read 1362 times:
Hong Kong (AHN) - Air China's shares were suspended in Hong Kong trading Monday on rumors that it may combine with Cathay Specific to ward off Singapore from entering the domestic aviation market.
Zeke From Hong Kong SAR, PRC, joined Dec 2006, 4791 posts, RR: 65 Reply 3, posted (2 years 2 months 1 week 6 days 1 hour ago) and read 1281 times:
Quoting Keesje (Reply 1): Where is Zeke when you need him?
Am here, don't think SQ have done their homework. CX has been training MU crews for a long time, still have a number of their crews wearing CX uniforms, the two airlines have already been working together.
I think this will end up being like the failed attempt of SQ to steal QFs market across the pacific, no doubt SQ will cry foul yet again, but in reality CX and MU have been working together for some time on many levels. Given the almost seemless integration of CA and KA with CX, you would see similar with MU and CX/KA, 30-40 flight a days between them on the HKG-PVG sector a day.
With CX achieving a 50+% increase in profits in the first 6 months, everyone was waiting for a significant purchase so the profit share for employees comes back yet again to 2/3's of ______ ___ __
With CA and CX share suspended, it is following a similar pattern of similar arrangements in the last couple of years.
Cathay Pacific wins Airline of the Year 2009 Award. Great service. Great people. Great fares.
Cloudyapple From Hong Kong SAR, PRC, joined Jul 2005, 1950 posts, RR: 7 Reply 5, posted (2 years 2 months 1 week 6 days ago) and read 1226 times:
News just out.
Quote: A proposed acquisition by Cathay Pacific Airways Limited ("Cathay Pacific"), together with China National Aviation Holding Company ("CNAHC"), of shares in China Eastern Airlines Corporation Limited ("China Eastern") will not now proceed.
Cloudyapple From Hong Kong SAR, PRC, joined Jul 2005, 1950 posts, RR: 7 Reply 7, posted (2 years 2 months 1 week 6 days ago) and read 1192 times:
Quoting JPRM1 (Reply 6): This leaves the way to SQ.
No.
The way I see it is that someone up there in Beijing is not happy with the Singaporean deal so they asked CNAC to do something about it. Cathay, being an ally of Air China's and having more successful experience in managing an international airline and has backing (cash) from John Swire, is being asked to assist to make the deal look less political.
Cathay didn't state the reason why the deal has fallen through but for sure something hasn't worked out. Don't bet on Beijing being so lenient and let the Singaporeans through though. China being China, if they arent happy with Singaporeans controlling a large chunk of one of their major airlines, they will find a way to block it. I think we are in for some more drama.
JPRM1 From France, joined Aug 2007, 60 posts, RR: 0 Reply 9, posted (2 years 2 months 1 week 6 days ago) and read 1140 times:
I must say that Cloudyapple is most probably right in his analysis. China is China, I agree.
If the CX action is no more viable, who will be in a position to do an offer in China? Southern?, Shenzen?
I think it will be very interesting to follow the game...
Astral From Canada, joined Mar 2004, 197 posts, RR: 0 Reply 10, posted (2 years 2 months 1 week 5 days 17 hours ago) and read 986 times:
General opinion in the civil aviation circle in China did not expect CX has any chance at all in the begining. If CX/CA is successful in controlling MU, the HKG-China routes will be over 70% in their control, which many 'Leadership' in China would not like to see. The domination would serverly limit competation and could lead to higher ticket prices.
Interestingly a few 'Leaders' in the Central Committe voiced their concerns about a SQ controlled MU, as they don not favours a foreign government controlled body to take over the running of a major Chinese State-owned corporation. The CX/CA move was a political response to their 'voices', nothing else, and this is why it falls apart so fast.
There are different ideas in China, if there should be three (soon to be four, with Grand China Air - aka Hainan Air), majors or just two. So far no conclusion to the idea, and no real decision as yet, and at the mean time the SQ deal is moving ahead for a vote by the MU share holders late this year.
China looks at the problem at MU more of a management issue, not a foreign interest one. So if political concerns are taken into full, repeat full consideration, the SQ deal will not go through. There are very strong 'Leaderships' opinion that another Chinese carrier should take control of MU, but still runs as three seperate airlines. Don't be surprised that this will path the way for China Southern Airlines (CZ) to buy into MU, or even allow Grand China Air to take-over MU. Since Grand China Air has moved its HQ to Beijing, and is demanding international 'profitable' routes, it is not unusual for them to asume MU's routes and still maintain the 'Three Majors' concept so much in favoured by some Leaderships.
Both CZ and Grand China Air has the financial ability to buy into MU, especially Grand China Air. As Grand China Air being from a new province, it enjoyed many 'concessions' including taxing, which then give its a strong position to buy.
More interesting remaining months in 2007.
Docpepz From Singapore, joined May 2001, 1763 posts, RR: 6 Reply 11, posted (2 years 2 months 1 week 5 days 16 hours ago) and read 934 times:
Quoting Cloudyapple (Reply 7): China being China, if they arent happy with Singaporeans controlling a large chunk of one of their major airlines, they will find a way to block it
25% is hardly a major chunk. SQ "controlled" 25% of Air NZ-Ansett and got burned. SQ has 49.5% of Virgin and can't do anything without Branson's consent. SQ will have no management control over MU at all. China has no problems with Temasek owning little chunks of its state-owned banks. Obviously the entire SQ/MU thing is political, and we'd never know what went on behind the scenes on a govt-govt level. Singapore must have given China something in return, and it may not even have been in the aviation circle.
Astral From Canada, joined Mar 2004, 197 posts, RR: 0 Reply 13, posted (2 years 2 months 1 week 4 days 18 hours ago) and read 687 times:
Docpepz is right. If the SQ deal is successful, there must a political gain for China in return.
The problem with SQ deal so far in China that caused 'waves' was that SQ announced they will send in senior management to run MU. That is a big no no !! All senior management at any China State-owned corporations has 'background' and 'relationship', plus at least a few would be Communist Party member in the Party Committe/Breau level. Just think how they will react knowing they will be 'replaced by foreigners' !!! I am sure you will understand why Leadership in Beijing is having some doubts.
The strong case supporting SQ is that Hainan Airlines (now Grand China Air) has a 10% foreign ownership already, and they would not be the first one to have foreign interest. Similarly CX, which is a British majority ownership owns about 20% of Air China (although Air China counter-owned about 10% CX). The major difference is that the ownership level is highest at 25%+, and with management actually in placed to run the operations. Further more it will allow Star Alliance the biggest access in the China market, I already heard 'noises' from China Southern which is a new Sky Team member, as I have still a contract with CZ.
Very interesting times ahead.
Ryanair!!! From Singapore, joined Mar 2002, 4296 posts, RR: 28 Reply 14, posted (2 years 2 months 1 week 4 days 15 hours ago) and read 645 times:
Quoting Astral (Reply 13): The problem with SQ deal so far in China that caused 'waves' was that SQ announced they will send in senior management to run MU. That is a big no no !! All senior management at any China State-owned corporations has 'background' and 'relationship', plus at least a few would be Communist Party member in the Party Committe/Breau level. Just think how they will react knowing they will be 'replaced by foreigners' !!! I am sure you will understand why Leadership in Beijing is having some doubts.
Hmm... if they are having doubts, they should be doubting themselves now. If MU weren't in their present financial state , would they even be thinking of selling away 25% of their company? Even top level officials have admitted that "management problems" have caused MU's woes. Yes, the next solution is to swap other party members for management positions within the airline. But will this help? Only time will tell.
SQ's position is like any other businesses, MAKE MONEY. And any fool would know China's potential to provide that. At the end of the day, I am hopeful that SQ will buy a stake into a carrier in China. Might not be MU, could be other carriers. Who knows, but watch this space because it is only a matter of time before the nay-sayers buckle and allow SQ into the market.
Welcome to my starry one world alliance, a team in the sky!
CHANGYOU From Singapore, joined Nov 2003, 198 posts, RR: 0 Reply 15, posted (2 years 2 months 1 week 4 days 10 hours ago) and read 561 times:
Quoting Astral (Reply 13): SQ announced they will send in senior management to run MU
just attended a briefing conducted by the SQ mgt...And NO...SQ will not interfere with MU's decision on anything. But SQ will act as a consultant IF MU decided to seek SQ's expertise.
Cloudyapple From Hong Kong SAR, PRC, joined Jul 2005, 1950 posts, RR: 7 Reply 16, posted (2 years 2 months 1 week 4 days 10 hours ago) and read 549 times:
It's obvious that it's not Cathay who has a problem with the Singaporean deal. Cathay has never any interest in buying any part of China Eastern. Same reason why they didn't want Philippine Airlines years ago. The books are not pretty and there is huge management issues. The company is also subject to political meddling.
It's a different deal altogether from the Air China deal with cross investments. It's a 2 way deal with Cathay and Air China being more or less sleeping partners on each other's board. The whole deal was designed for CNAC to offload Dragonair into Cathay while not reducing investment in the combined company. This was achieved by creating a bigger pie to share amongst themselves.
Just think about how much better the Air China deal was when compared to the proposed China Eastern deal - one way investment to become a major minority shareholder with little say on the board and no direct involvement in day to day running. Not difficult to understand why Cathay is not too enthusiastic.
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