China Eastern In Talks With Airline Alliances

February 25, 2010

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China Eastern Airlines is in talks with Star Alliance and the other two global airline industry alliances as it moves to boost its profile, a senior company executive said on Thursday.

China Eastern, the only one of the country's three biggest carriers without a global affiliation, is exploring joining one of the industry alliances said the executive, who asked not to be identified because of the sensitivity of the matter.

American Airlines' parent AMR is in advanced talks with China Eastern to bring it into the oneworld alliance, AMR's chief financial officer Tom Horton said earlier this week.

But the China Eastern executive said the carrier did not have a preferred partner so far.

"We are holding parallel discussions with all three groups currently. We hope to join one of them eventually but we don't know which one yet," said the executive.

Shanghai Airlines, which China Eastern acquired in February under a government-backed deal, belongs to Star Alliance.

But that does not necessarily mean the alliance is a preferred partner of China Eastern, added the Chinese executive.

China has been a major bright spot amid a dismal global industry downturn which has pushed Japan Airlines into bankruptcy.

Chinese airlines carried 159 million passengers last year, up 15 percent from 2008, according to official data, as Beijing's aggressive economic stimulus lifted consumer confidence.

Airlines worldwide, looking for a way to cut costs and increase scale absent full-blown mergers, are seeking more alliances and figuring out ways to cut costs using current ones.

China Southern Airlines is a member of SkyTeam already.

American Airlines had merger talks with US Airways and alliance talks with Continental Airlines in 2008, just after Delta Air Lines and Northwest merged. Those talks ended as Continental chose to pursue an alliance with United, a source had said.

(Reuters)