China Eastern Airlines yesterday said China National Aviation Corp's comments on the proposed sale of shares to Singapore Airlines and Temasek "lacked objectivity".

A two-page statement by China Eastern said China National Aviation is China Eastern's competitor and that although it is also a major shareholder, China National Aviation's concern is not representative of that of other shareholders.

The parent company of Air China, China National Aviation, which owns a 12.07 percent stake in China Eastern, said on Monday that the offer by Singapore Airlines Ltd for a stake in China Eastern did not reflect a fair value of the Shanghai-based airline, and that it reserved the right to make a counter-proposal. It requested China Eastern and the bidders to present a better proposal.

China Eastern stressed the company has not received any similar proposal from other suitors.

China Eastern also pointed out that the sale price of HK$3.8 per share is reasonable because it is a result of long-term negotiations with the buyers. The price represents a 35.7 percent premium on the average H-share price from April 22 to May 21.

According to statistics from Tebon Securities, HK$3.8 is 31.93 times the company's expected 2007 annual earnings per share, higher than Air China's P/E of 28 and China Southern Airline's 24.9, based on their respective share prices on December 11.

Gao Jianming, a Beijing-based spokesman from China National Aviation, was quoted by Bloomberg as saying the company would offer what the current deal is lacking. "We believe other minority shareholders will also vote against the deal," said Gao.

Analysts said many investors are hoping to gain from a much higher price that Air China may offer.

"China National Aviation's latest comments are expected to persuade many minority shareholders to vote against the proposal," said Xia Fulu, an analyst at Industrial Securities.

China National Aviation said in a previous statement that the conditions China Eastern granted to Singapore Airlines and Temasek Holdings are unfair to minority shareholders and are thus deemed to have the effect of obstructing the development of the industry.

(China Daily January 4, 2008)