Cathay Pacific Airways has expressed its support for any possible plan by Air China's parent to bid for China Eastern Airlines.

Tony Tyler, chief executive of the Hong Kong flagship airline, said on Wednesday that the carrier is happy to support any proposal Air China's parent - China National Aviation Holding Company - may have.

Cathay and China National Aviation, which hold stakes in each other, are seeking a tie-up with Shanghai-based China Eastern in bid to dominate the world's second-largest aviation market.

China National Aviation last week successfully blocked China Eastern's plan to sell a 24-percent stake to Singapore Airlines and its parent Temasek Holdings Pte in a HK$7.16-billion deal by offering a much higher bid price.

China National Aviation, which owns 12.07 percent of China Eastern's H-shares, said it will offer at least HK$5 per share, compared with SIA's HK$3.80, for up to 30 percent of the Shanghai-based airline. China National Aviation will reveal the bidding plan by January 22 - two weeks after China Eastern's minority shareholders killed the SIA deal.

But there seems some confusion over whether Chinese Eastern, the country's third-largest carrier, will accept China National Aviation as a partner. When the carrier's stance seemed to soften after a remark by an unidentified official that it may seriously study the bidding plan, Luo Zhuping, board secretary of China Eastern, denied the remark and insisted it won't accept China National Aviation as a strategic investor.

An official of China National Aviation was reported by the media as saying that the bidding plan has been drafted and is going through certain proceedings, and it will be revealed as scheduled.

"The plan must get approval from its major shareholder - the State-owned Assets Supervision and Administration Commission of the State Council, and China National Aviation should also seek opinions from the General Administration of Civil Aviation of China," said Li Lei, an analyst at China Securities Co.

Ma Xiaoli, an analyst at CITIC Securities Co, said the possibility of the two Chinese carriers cooperating is growing after the former chairman of Air China, Li Jiaxiang, was named to head CAAC, the aviation industry regulator, and SASAC changed its support for the Singapore deal to neutral.

(Shanghai Daily January 18, 2008)