My Account Menu

CAPA Login

Register to trial CAPA Membership!

China Eastern shares surge on renewed merger hopes - share price wrap

China Eastern Chairman, Liu Shaoyong
China Eastern Chairman, Liu Shaoyong
  • China Eastern shares surge almost 7% on restructuring and merger hopes;
  • Air China and China Southern sold on removal of domestic fuel surcharges;
  • Qantas and Virgin Blue fall on recession fears.

China Eastern Airlines shares surged 6.9% in Hong Kong yesterday (going against the 3.4% drop in the Hang Seng Index) on reports it may offload stakes in smaller regional carriers and on renewed speculation it may merge with Shanghai Airlines (+2.3%). China Eastern is also hoping to defer orders for 15 of 29 aircraft scheduled for delivery this year (though it may find this to be a costly exercise).

Counterparts, Air China (-8.1%) and China Southern Airlines (-2.3%) fell after the government scrapped domestic jet fuel surcharges. Investors are sceptical the reductions will boost demand enough to offset the decrease in revenue. Citigroup estimates China's airlines incurred losses of USD2.9 billion in 2008 - around three times the CAAC's prediction.

Elsewhere in the region, Qantas (-7.1%) and Virgin Blue (-5.6%) were hit by recession fears in Australia.

Asia Pacific selected airlines daily share price movements (% change): 15-Jan-09

Want more analysis like this? CAPA Membership gives you access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.
Find out more and take a free trial.