Shareholders approve China Eastern, Southern bailouts

Singapore
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Shareholders in loss-making China Eastern Airlines and China Southern Airlines have approved plans for share placements that will lead to cash injections from the Chinese Government.

Shanghai-based China Eastern and Guangzhou-based China Southern say in separate stock exchange filings that shareholders approved their respective share placement proposals at meetings yesterday.

The proposals will see the state-owned parent company of each airline increasing its direct and indirect holding by buying the new shares, diluting the stakes held by other shareholders.

China Eastern and China Southern announced in December that their parent companies had agreed to provide them with 3 billion yuan ($439 million) each to help them cope with losses. China Eastern's aid package was more than doubled a few weeks later to 7 billion yuan.

Under the now-approved proposals, China Eastern's parent will be increasing its holding to 74.6% from 59.7%. China Southern's parent will lift its stake to 59.2% from 50.3%.

China's airlines have been struggling over the past year as costs have risen and demand has fallen.