Cathay denies China Eastern plans

Cathay refused to be drawn on why it ditched the deal

Cathay Pacific has said it has dropped plans to bid for a stake in China Eastern Airlines.

The announcement came after the firm asked for its shares to be suspended on the Hong Kong index on Friday.

Earlier on Monday Air China shares were also suspended in Hong Kong, on reports it planned to team up with Cathay to buy a stake in China Eastern Airlines.

Reports had claimed, the pair had hoped to block a planned deal between China Eastern and Singapore Airlines.

Under the $918m (£453m) deal - which has been approved by the Chinese government - Singapore Air will buy a 24% stake in the carrier.

Ditched

In a short statement, Hong Kong-based Cathay said it had had planned to team up with China National Aviation Holding Company to buy a slice of Shanghai-based China Eastern but that the proposed acquisition "will not now proceed".

However, Cathay declined to explain why it had dropped the plans, also refusing to give details of the proposed purchase.

The Chinese airline market has been experiencing significant growth, making a deal for part of China Eastern appealing.

During the first six months of the year total passenger traffic on Chinese airlines grew by 16.7% to 86.7 million - with traffic on international routes up 21.8% to 7.9 million and domestic traffic 16.2% higher at 78.8 million.

China Eastern is based in Shanghai and offers both domestic and international services.