On Feb. 27, China Eastern Airlines formally rejected Air China's bid to raise its stake in the Shanghai-based airline from 12% to just over 26% and said it will continue its search for a strategic investor with a continued preference for Singapore Airlines.

CA parent China National Aviation Holding Co. submitted its bid to CEA last month, saying it intended to purchase 2.9 billion H shares for at least HK$5 (US$0.64) per share. CNAC also said it would cooperate with CEA, especially in Shanghai, and that the carriers would launch a cargo JV. But CEA accused CA of "lacking sincerity to make the cooperation happen." CEA Board Secretary Luo Zhuping noted earlier that the companies had no contact and conducted no negotiations following CA's bid submission.

Ying Ming Law Firm, CEA's legal adviser, said in a statement that CA's bid was full of "uncertainties" and could lead to "anti-trust investigations." CEA financial adviser Shenyin & Wanguo Securities Co. said the bid would not enable CEA to realize its goal of importing foreign know-how that could advance its management expertise and upgrade its operating level and profitability.

To that end, CEA Independent Director Zhou Ruijin revealed that the airline's board still prefers SIA's bid even though SIA CEO Chew Choong Seng insists there will be no increase of its offer for a 24% stake. "Whether SIA will raise its offer or not is not the most important thing," Zhou said, adding that CEA and SIA will begin new discussions on the stake sale soon.