China Eastern Aims To Sell 30% Of Happy Air - Sources

January 13, 2009

China Eastern Airlines is in detailed talks to sell a roughly 30 percent stake in regional carrier Happy Airlines to Aviation Industry Corporation of China (AVIC), which owns a majority of Happy Airlines, company sources said on Tuesday.

China Eastern currently holds a 40 percent stake in the airline, which is based in Xi'an, in western China.

"China Eastern wants to cut its holdings in Happy Airlines to help ease its financial difficulties. That intention is well understood by AVIC," a company source with direct knowledge of the matter said.

Another company source added: "China Eastern wants to sell around a 30 percent holding to AVIC and the two sides are working on the details."

A China Eastern spokesman declined comment.

In February 2008, China Eastern won regulatory approval to set up Happy Airlines, capitalised at CNY1 billion yuan (USD$146 million), with AVIC I, a state-owned aircraft maker. AVIC I later merged with peer AVIC II to form aviation conglomerate AVIC.

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