China Eastern, Shanghai Airlines kick off flight business restructuring

China Eastern Airlines (CEA.NYSE; 00670.HK; 600115.SH) has kicked off the restructuring of their flight businesses with Shanghai Airlines, Ma Xulun, general manager of China Eastern disclosed.

The new China Eastern based on a merger of the two airlines has started to re-arrange flights and set up a new flight route networks with Shanghai Airlines. "This is the fundamental issue for the restructuring", noted Ma.

The new China Eastern will boast over 320 aircraft. It plans to launch 26 express flight routes in the domestic and international aviation markets in the future.

Before the restructuring, Shanghai Airlines had a 15 percent market share in Shanghai and China Eastern took 40 percent. However, the new China Eastern will not be able to obtain over 50 percent of the Shanghai market share easily as the businesses of China Eastern and Shanghai Airlines are highly overlapped.

So far, a major part of the international flight routes of China Eastern and Shanghai Airlines are medium and short routes to southeastern Asia and their domestic flight routes mainly start from Shanghai.

China Eastern said in July it would swap 1.3 of its Shanghai-listed A shares for every Shanghai Airlines share. Shanghai Airlines, which has 1.3 billion outstanding shares, will be delisted from the Shanghai stock exchange after the merger with China Eastern.

China Eastern has completed the internal legal procedures for its merger plan with Shanghai Airlines after the plan was approved by the shareholders of both companies Friday. But the plan is yet waiting for the approval from China Securities Regulatory Commission (CSRC).

Related terms: aircraft, asia, business, china, legal, market share, massachusetts, merger, restructuring, securities, shanghai