It appears certain that Singapore Airlines will buy a certain stake in the money-loosing China Eastern Airlines as both companies have said they will soon make a major announcement.

The two companies halted trading of their shares on Tuesday and insiders say an announcement could come as early as Friday.

"We are waiting for word from the headquarters," said Wang Yong, manager of Public Relations Department of Singapore Airlines' China office when asked about the potential deal.

For China Eastern, the deal would provide a major cash injection and help improve the quality of its assets. China Eastern Airlines lost 510.86 million yuan in the first quarter of 2007, down from 955.1 million yuan in losses for the same period last year, according to its unaudited quarterly report.

Singapore Airlines would also bring to China Eastern managerial expertise and in return get access to China's rapidly growing mainland aviation market.

Li Fenghua, chairman of China Eastern, said earlier that Singapore Airlines would not get more than 25 percent of his company, which is the maximum allowed by Chinese law.

Li was also quoted earlier as saying the deal needed policy support from the government. The agreement does require approval from regulators.

Goldman Sachs calculates that 25 percent of China Eastern is worth about one billion U.S. dollars based on its share price on the Hong Kong exchange on Monday of 3.73 Hong Kong dollars (0.47 U.S. dollars).

China Eastern's A-share price has nearly tripled since February. It settled at 9.60 yuan before trading was suspended on the Shanghai market on Tuesday.

Li Lei, analyst of China Securities Co., Ltd., says Singapore Airlines is likely to buy the relatively lower-priced Hong Kong shares. (one yuan equals about 0.13 U.S. dollars)

Source: Xinhua