July 25, 2008

China Eastern and Shanghai Air May Merge

In response to soaring oil prices and slowing growth in passenger traffic, China's central government and the Shanghai city government are negotiating the merger of Shanghai Airlines and China Eastern Airlines, reported Reuters, citing the business magazine Caijing.

Senior officials of both airlines, including Shanghai Air's chairman Zhou Chi, have denied the speculation regarding the merger, which has been talked about for more than five years but not completed since neither of the two parties is willing to be the takeover target.

The slowdown in global economy, natural disasters and strict airport safety checks for the Olympic Games have resulted in a 3.8% drop in Chinese airlines' passenger traffic in June 2008 compared to June 2007.