Singapore Air To Help Guide China Eastern
Singapore Airlines Ltd. executives could have an unusually high degree of authority to revamp operations at China Eastern Airlines Corp. if the shaky Chinese carrier wins shareholder approval next month for a strategic investment by the Singaporean firm.
China Eastern Chairman Li Fenghua said that as part of the planned tie-up, his company would take 10 Singapore Airlines executives on permanent assignment to draw directly on SIA's managerial expertise. In turn, China Eastern would assign 20 of its managers to Singapore to spend six months learning from SIA counterparts.
These exchanges are an important element of the strategic relationship that Mr. Li foresees between his Shanghai-based company and Singapore Airlines. He disclosed these and other details of their plans in an interview Friday, as he sought to drum up shareholder support in Hong Kong for the milestone investment. The tie-up could help invigorate one of China's weakest airlines and, if it works, reorder competition in the hard-charging Chinese aviation industry.
Singapore Airlines and the government-owned investment company Temasek Holdings Pte. Ltd. have agreed to pay HK$7.16 billion (US$918.2 million) for a combined 24% stake in China Eastern. It would be the largest foreign investment in a state-run Chinese carrier; the only comparable stake would be the 17.5% cross-shareholdings between Hong Kong's Cathay Pacific Airways Ltd. and Air China Ltd. of Beijing.
China Eastern's shareholders are to vote on the proposed deal Jan. 8. Mr. Li played down speculation that Air China's parent, state-run China National Aviation Holding Co., might try to spoil the deal by launching its own bid, arguing that the Chinese government has blessed the Singaporean investment.
Shares of China Eastern are listed on Hong Kong's stock exchange. The company also has American depositary receipts that trade on the New York Stock Exchange.
Under the proposed investment, China Eastern would expand its board membership to 14 from 11, with SIA appointing its chairman, Stephen Lee Ching Yen, and its chief executive officer, Chew Choon Seng, to serve on it. Temasek would hold the third new seat on China Eastern's board, though it hasn't yet nominated a candidate, Mr. Li said.
Singapore Airlines, one of the world's most profitable carriers, also would infuse managerial expertise at an operational level. 'Singapore Airlines will send 10 personnel from various departments to work side-by-side with us, mainly in product development, sales and marketing, and treasury operations. This is long-term. They will actually be on permanent secondment to China Eastern,' Mr. Li said.
While such arrangements aren't unheard of, China Eastern and SIA would take them to an unusually high level, especially for a Chinese company. Cathay Pacific executives made brief visits to Beijing to share information with their Air China counterparts soon after those carriers reached their cross-shareholding agreement in 2006. Both carriers also have hosted joint workshops in engineering, computer support and other operations, but these personnel exchanges haven't been long-term secondments, a Cathay Pacific spokeswoman said.
Mr. Li added that the board will 'design a system, a way of working, to ensure that they will have sufficient authority to implement the changes they see as necessary. As chairman, I will see that this happens. They are not coming just to be advisers. Otherwise, we could have just employed consultants.'
The 20 China Eastern managers dispatched to Singapore would return after six months as 'a unified team' to instruct their colleagues about the way SIA does business.
'We hope that with this kind of arrangement, the whole management structure will be beefed up. This is the most important thing,' Mr. Li said.
China Eastern hopes in particular to benefit from SIA's experience operating international routes and attracting wide-margin business in premium classes. Passenger traffic in China has grown by an annual average of 17% over the past five years, China Eastern says, but the carrier's financial performance has failed to keep pace, Mr. Li acknowledged. Competition has grown especially fierce in Shanghai, China's commercial capital, where China Eastern claims a 36% market share.
China Eastern has bled money for the past two years and has crushing debts. According to international accounting standards, the airline posted net losses of 3.31 billion yuan (US$449.1 million) for 2006 and 467.3 million yuan for 2005. Results for this year's first six months suggest it might be turning the corner: a net profit of 58.2 million yuan, compared with a net loss of 1.34 billion yuan a year earlier.
SIA's proposed investment would inject 11.3 billion yuan in fresh equity. With the help, Mr. Li wants first to improve China Eastern's domestic business, which now generates slightly more than half of the carrier's total revenue. Later, he said, it will focus on strengthening its international business. The goal is to boost China Eastern's profit to the level of 'a good performer,' he said, naming Air China, Cathay Pacific and Air France, part of Air France-KLM SA, as benchmarks.
One operational advantage for China Eastern and SIA is that they have few overlapping routes, Mr. Li said. In contrast, he claimed, Air China and Cathay Pacific share many more duplicate routes. A spokeswoman for Cathay Pacific said it has only four duplicate routes with Air China in the Chinese mainland.
新加坡航空公司(Singapore Airlines Ltd.)的管理人员可能在中国东方航空股份有限公司(China Eastern Airlines Corp.)的运营整顿中拥有相当的决定权，前提是下个月东方航空的股东批准新加坡航空公司对这家摇摇欲坠的企业进行战略投资。
东方航空董事长李丰华称，根据拟议中合作意向，公司将长期任用10名新航管理人员，直接汲取新航的管理经验；同时，东方航空将选派20名经理人到新加坡向新航的同行们“取经”，为期六个月。
李丰华预计东方航空将与新航缔结战略伙伴关系，上述合作正是这种伙伴关系中一个重要部分。李丰华上周五接受采访时透露了包括人员交换在内的其他细节，力图获得香港股东对这一重大投资的支持。东方航空在中国航空公司中排名靠后，它与新航的结盟不仅将为其增强实力，而且如能获得成功，还将重塑中国航空业的竞争格局。
新加坡航空公司和新加坡国有投资公司淡马锡控股(Temasek Holdings Pte. Ltd.)已同意斥资71.6亿港元 （合9.182亿美元）共同收购东方航空24%的股份。这将是中国国有航空公司获得的最大一笔外资投入；唯一能与之相提并论的是国泰航空有限公司(Cathay Pacific Airways Ltd.)与北京的中国国际航空公司(Air China Ltd.)互相持股17.5%的交易。
东方航空的股东将在1月8日就这项交易投票。李丰华表示中国政府支持新加坡方面的投资，这给人们对国有中国航空集团公司(China National Aviation Holding Co.)或将宣布参与竞购的猜测泼上了一盆冷水。中国航空集团公司是中国国航的母公司。
东方航空股票在香港证券交易所上市。该公司的美国存托凭证(ADR)在纽约证交所交易。
根据投资计划，东方航空董事会将从11人扩展至14人，新航将指派其董事长李庆言和首席执行长周俊成加入东方航空董事会。李丰华说，淡马锡控股将得到东方航空董事会的第三个新席位，不过该公司还没有提出人选。
作为全球最赚钱的航空公司之一，新航还将向东方航空灌输运营方面的管理经验。李丰华表示，新加坡航空将指派来自各个部门的10名管理人士与东方航空员工并肩工作，主要是在产品开发、销售和营销以及财务管理方面；合作将是长期的；他们实际上是长期借调到了东方航空。
虽然这样的安排谈不上闻所未闻，但东方航空和新航的合作确实达到了非比寻常的高度，特别是对于一家中国公司而言。2006年国泰航空与中国国航达成互相持股协议后，国泰管理人员只是短暂访问了北京，与中国国航的同侪分享了信息。国泰航空发言人说，两家公司也有工程、电脑支持和其他业务方面的合作项目，但这种人员互换并非长期借调。
李丰华还表示，董事会将设计一个系统、一种工作方式，以确保借调人员有足够的权力来推行他们认为必要的变革。李丰华表示，作为董事长，他将保证计划的履行；新航的管理人士到东方航空不光是提出建议的，否则公司只要请一些顾问就够了。
被派往新加坡的20名东航管理人员将会在六个月后作为一个整体团队回到东航，将新航开展业务的方法教给同事。
李丰华表示，东方航空希望这样的安排能加强整个管理体系，这是最重要的一点。
东方航空尤其希望从新航经营国际线路以及吸引高利润率的头等舱/商务舱客户的经验中获益。东方航空称，过去五年中国航空业的客运量平均每年增长17%，但李丰华承认公司的财务业绩却没跟上。在上海这个中国的商业中心竞争尤其激烈，总部就设在上海的东方航空称自己在当地占有36%的市场份额。
过去两年中东方航空一直在亏损，并背负着巨额债务。按照国际会计准则，该公司2006年净亏损人民币33.1亿元（合4.491亿美元），2005年净亏损人民币4.673亿元。今年上半年的业绩显示东方航空可能扭转了局面：公司实现净利润人民币5,820万元，而上年同期净亏损了人民币13.4亿元。
新加坡航空的投资计划将为东方航空带来人民币113亿元的新股本。借此注资，李丰华想首先增强东方航空的国内业务，这部分业务收入略多于公司总收入的二分之一。随后东方航空将重点加强国际业务。李丰华说，他的目标是将东方航空的利润提高到优秀航空公司的水平，并举出中国国航、国泰航空和法国航空公司(Air France)等为基准。
李丰华说，东方航空和新加坡航空的一大运营优势在于它们的重合线路很少；而相比之下，中国国航与国泰航空就有很多相同线路。国泰航空发言人说公司在中国大陆与中国国航只有四条线路相同。