China Eastern Airlines' Shares Plunged Despite Ctrip Deal
Charissa Echavez | | Apr 23, 2016 11:18 AM EDT |
(Photo : Getty Images) China Eastern Airlines saw a downward trend of shares despite its recent deal with Ctrip.com International Ltd.
Aviation company China Eastern Airlines Corp Ltd. posted a 5.29 percent share decline in Shanghai on Friday, closing at 6.27 yuan (96 cents) per share despite its recently announced partnership with travel service provider Ctrip.com International Ltd.
Under the recent agreement signed on April 21 in Shanghai, Ctrip will buy 3 billion yuan ($461.6 million) worth of the airline's A shares. Moreover, both companies plan to cooperate on budget airlines, technology,and e-commerce.
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Investors disregard the deal, although the Shanghai Composite Index increased by 0.22 percent, closing at 2,959.24 points on Friday. Meanwhile, its stock performance trended oppositely from other markets. In New York, shares of the company climbed 3.43 percent on Thursday at 199.64 yuan ($30.72) apiece, at the same time in Hong Kong, shares also increased 0.44 percent at 3.84 yuan (59 cents).
According to Yu Nan, Haitong Securities Co.'s industrial analyst, "The opposite market responses have reflected investor attitudes toward the news," explaining that the collaboration between the two companies may have been a positive move for investors in the United States and Hong Kong and that Chinese investors are potentially looking at long-term prospects.
China's second largest carrier by passenger has been actively looking for potential strategic partners. Last year, it signed an agreement with Delta Air Lines to sell 10 percent of its H shares worth nearly 3 billion yuan ($450 million) to the US based carrier.
"We already have an observer from Delta, and Ctrip will be entitled to appoint a director at China Eastern's board of directors and participate in the decision-making once its stake reaches 10 percent," Ma Xulun, China Eastern's president, said. "We expect their participation will effectively enhance China Eastern's management in their specialties."
TagsChina Eastern Airlines, Ctrip, Partnership, Delta Air Lines, China stock market, Shanghai Composite Index
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