China Eastern Airlines is planing to buy a 3.154 billion yuan (US$450 million) stake in Juneyao Airlines, after selling more than 5% of its shares to the latter, The Paper reported.
Juneyao announced on Monday that it intends to issue a non-public offering of 169 million shares to a subsidiary of China Eastern, the Eastern Airlines Industry Investment Co. Ltd., aiming to raise no more than 3.154 billion yuan.
The funds raised will be used to introduce three B787 aircraft, purchase one GEnx-1B74/75 spare engine and repay bank loans.
After the transaction, China Eastern will hold 8% of the shares of Juneyao, but the transaction will not lead to changes.
At present, China Eastern holds 40% of the market share in Shanghai, while Juneyao is the third largest carrier in Shanghai with a market share of about 8%.
Analysts say the cooperation between the two airlines will dominate nearly half of the Shanghai airline market.