STOCK ALERT- Cathay Pacific, Air China up on possible tie-up for China Eastern

Cathay Pacific Airways Ltd and Air China were higher after Cathy said it will consider joining Air China and its parent for a strategic alliance with China Eastern Airlines (CEA) if CEA's minority shareholders reject the carrier's proposed stake sale to Singapore Airlines (SIA) and Temasek Holdings.

CEA's shareholders will vote today on the SIA-Temasek deal.

At 10:11 am, Cathay Pacific shares were up 0.30 hkd or 1.50 pct at 20.30 while those of Air China rose 0.24 hkd or 2.28 pct to 10.76.

Trading in China Eastern shares was suspended ahead of the shareholder vote.

Air China's parent China National Aviation Corp (CNAC) has said it will make a bid of at least 5.0 hkd a share for up to 30 pct stake in CEA if the SIA-Temasek deal is voted down.

The Singapore firms had offered to buy 24 pct stake in CEA at 3.80 hkd a share.

Cathay announced yesterday that it will "seriously consider any proposals which CNAC and/or Air China may make for Cathay Pacific to participate in a strategic partnership with China Eastern Airlines and to realise any synergies that may arise from such a strategic partnership."

CNAC currently holds 12 pct stake in CEA.

(1 usd = 7.80 hkd)