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China Eastern sees Shanghai Air merger plan next wk-paper

Wed Jul 8, 2009 9:31pm EDT

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SHANGHAI, July 9 (Reuters) - A detailed proposal for a long-anticipated merger between Shanghai Airlines (600591.SS) and China Eastern Airlines (600115.SS) (0670.HK) is expected to be ready next week, the official Shanghai Securities News reported on Thursday, citing China Eastern's chairman Liu Shaoyong.

Shares in the two money-losing carriers, which have been grappling with weak air travel demand as China's economy slowed and have been suspended since June 8, are likely to resume trading on Monday, the paper said, citing unnamed sources.

"The merger progresses very smoothly, and there are some inside and outside procedures to work out," the newspaper quoted Liu Shaoyong as saying.

The newspaper said a possible merger agreement would be a share swap between the two airlines.

The shareholders of Shanghai Airlines could exchange one share for 1.3 shares in China Eastern or exercise their cash options, the newspaper said, citing unidentified sources. (Reporting by Alfred Cang and Jacqueline Wong)



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