Shanghai Air Shares Suspended From Thursday

February 5, 2009

Shanghai Airlines said its shares will be suspended from Thursday as it engages in discussions with shareholders on a plan aimed at reducing the asset liability ratio.

"It is expected that such a plan will have a great impact on the company," the regional carrier said in a statement published in the official China Securities Journal.

Shanghai Airlines, more than 35 percent owned by the Shanghai city government, said its shares will resume trading after announcement of the plan, without providing a timeframe or other details.

Government and industry sources have said that the authority was discussing the possibility of brokering a merger of Shanghai-based China Eastern and Shanghai Airlines.

Shanghai Airlines has said it expects a net loss for 2008 to have at least doubled from the previous year's CNY435 million yuan (USD$64 million), as the passenger travel market weakened in China.

Previously, the carrier also said it needed to raise capital from its shareholders but was still studying the matter and had no concrete fund-raising plans.