Chinese online travel retailer Ctrip has acquired a 3.55% stake in China Eastern Airlines (MU, Shanghai Hongqiao) for CNY3 billion (USD463 million) as part of a Strategic Cooperation Framework Agreement signed late last week.
Under the terms of the agreement, Ctrip has the option of increasing its shareholding to 5% and 10% respectively. Each shareholding brings added advantages; in the former's case a board observer seat and in the latter, actual board membership.
Aside from the equity investment, the two sides will also cooperate in the areas of low-cost travel (including but not limited to China United Airlines (KN, Beijing Daxing International)), aviation insurance, IT and e-commerce among other aspects.
"Both parties (being CEA Holding and Ctrip) intend to have in-depth cooperation in aspects including sales of international flight tickets, the display of fare finders and platform supplier management and integrate the quality resources of them and their subsidiaries, in order to promote the mutual and steady business development of both parties on a win-win basis," a Shanghai Stock Exchange filing said.
China Eastern plans to use the added capital to fund its fleet expansion programme which should see it operating more than 800 aircraft by 2020, up from 561 as of the end of 2015.
