On November 29, China Eastern Airlines entered into a Disposal Agreement to sell its 100% stake in Eastern Logistics.

The transaction with Eastern Airlines Industry Investment Co., Ltd., a wholly-owned subsidiary of China Eastern Air Holding, amounts to 2.43 billion yuan, China Eastern disclosed in a stock exchange statement.

Eastern Logistics, which deals with fright logistics business, wholly-owns Shanghai Eastern Transport and Eastern Express, while also holds an 83% stake in China Cargo Airlines.

Upon completion of the Disposal, each member of the Eastern Logistics Group will become a subsidiary of CEA Holding, which is the controlling shareholder of China Eastern.

The Shanghai-based carrier said Eastern Logistics had endeavored to change its business model in recent years but its share of the freight market has been shrinking, and its prospects unclear due to the relatively low competitiveness and risk resistance. Subsidiary China Cargo also suffered "large losses" from 2011 to 2015.

Therefore, the disposal is "a specific measure and reasonable option" for the airline to cope with "poor conditions of the air freight market" and is beneficial in improving the overall operational performance and focusing relevant resources on operating its air passenger transportation business in future.

For the six months ended June 30, Eastern Logistics and its subsidiaries posted an operating profit of 2.61 billion yuan, and a net profit of 272 million yuan (after taxation).

China Eastern added proceeds from the disposal will be used as general working capital for the group.

The Disposal will however have to be approved by shareholders in a meeting on January 17, 2017.