China Eastern Announces Merger Terms

China Eastern Airlines said on Monday it would merge with Shanghai Airlines in a share swap and issue A shares and H shares worth about CNY7 billion yuan (USD$1.03 billion) to replenish its working capital.

Trading in China Eastern's shares listed in Hong Kong and Shanghai, suspended since last month, will resume trading Monday, it said.

Shanghai Airlines will become a wholly-owned subsidiary of China Eastern while retaining its brand and independent operation, Xinhua news agency said late on Sunday, citing Liu Jiangbo, spokesman of the team overseeing the tie-up.

The two money-losing carriers have been grappling with weak air travel demand as China's economy slowed.

The merger will give China Eastern, one of China's three state-owned airlines, about a 50 percent market share in Shanghai, the wealthy coastal city that is China's financial hub.