SkyTeam offer airlines plane sailing
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"We have good cooperation with China Eastern, and its participation in the alliance will widen our cooperation and generate more profits for us," said China Southern Chairman Si Xianmin.
Earlier this year, China Eastern acquired smaller rival Shanghai Airlines, which is a member of the Star Alliance. Shanghai Air is expected to drop its membership in that alliance, but China Eastern didn't disclose when that might occur.
The merger of Shanghai's two biggest airlines is expected to further weaken Air China's grip on the domestic market.
"Joining an international airline alliance is part of China Eastern's strategy to strengthen core profitability and boost market competitiveness," said Liu Shaoyong, chairman of the carrier. "It will help us improve our business, especially business and first-class seats on international routes, and will support our efforts to break even this year and return to profitability of our main business next year."
The carrier returned to profit last year by earning 540 million yuan after a record 14 billion yuan loss in 2008. But its main business revenue still declined 4.58 percent to 37.94 billion yuan.
Luo Zhuping, the carrier's board secretary, said on Tuesday that the carrier expects to increase flight capacity on international routes this year to 40 percent from 30 percent.
China Eastern now operates more than 330 aircraft to 151 destinations. Its participation in SkyTeam will add 25 new destinations, increasing the alliance's daily flights by 10 percent.
"China Eastern will have great chance to enhance its presence in Japan after Japan Airlines said it would sharply reduce its international flights," said Tao Wei, an analyst at China International Capital Co Ltd.
Liu said China Eastern remains interested in strategic investment from other airlines, and they don't necessarily have to be members of SkyTeam.
Singapore Airlines, which had intended to buy a stake in China Eastern but was blocked by Air China in 2008, is back in the picture amid speculation that it will re-launch cooperative links with China Eastern. Singapore Airlines is a member of the Star Alliance.
"We expect China Eastern will secure strategic investors and also a bigger cash injection from the central government to restart its talks with Singapore Airlines," said Ma Xiaoli, an analyst at Citic Securities Co.
The carrier said on Tuesday that it is seeking fresh government investment among other avenues for capital-raising.
But it isn't currently involved in any talks with potential foreign partners.
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