China Eastern Airlines will set up a wholly-owned subsidiary to house the assets and debts of Shanghai Airlines, which it took over.
The new subsidiary will be called New Shanghai Airlines, says China Eastern, which is still in the process of establishing the subsidiary.
"Assets and credits and debts related to the core aviation business of Shanghai Airlines will be transferred into New Shanghai Airlines," it adds.
The remaining assets, credits and debts will be transferred into China Eastern, says the carrier.
It offered to take over Shanghai Airlines in July 2009 in a 9 billion yuan ($1.3 billion) deal, by swapping 1.3 of its Shanghai-listed A-shares for every Shanghai Airlines share.
China Eastern has issued almost 1.7 billion shares to the shareholders of Shanghai Airlines, says the carrier. The shares exchange was completed on 28 January.