China Eastern parent cuts TravelSky stake

China Eastern Air Holding will water down its shareholding in Travelsky Technology after it agreed to sell a 4.97% stake in the Chinese aviation IT services provider to China Mobile Capital. A stock market disclosure issued on December 15 said China Mobile Capital had agreed to acquire 145.5 million domestic shares in TravelSky held by the China Eastern Airlines (MU, Shanghai Hongqiao) parent. The value of the transaction was not disclosed although based on TravelSky’s end-of-day share price on December 15 (HKD18.78 (USD2.42)), it was in the region of HKD2.73 billion Hong Kong dollars (USD352 million). Once the deal closes, China Eastern Air Holding will cease to be a major shareholder in TravelSky retaining 211,798,500 domestic shares equivalent to a 7.24% stake. By contrast, China Mobile Capital’s shareholding will grow from 5.01% to around 9.98%. “Eastern Air Holding has confirmed that the transaction is for the purposes of its own business development needs and will not have any impact on the long-term business cooperation relationship between Eastern Holding and its subsidiaries and TravelSky,” the filing said. “Eastern Holding and its subsidiaries will continue to maintain strategic cooperation with the company and will firmly support the business development of the company. Eastern Holding does not have any plan to further reduce its shareholding in TravelSky.” Though floated in Hong Kong, TravelSky is controlled by various Chinese state-owned enterprises which include the China TravelSky Holding Company, China Eastern Air Holding, China National Aviation Holding (Air China’s parent), China Southern Air Holding (China Southern Airlines’ parent), and China Mobile Capital. With the exception of Spring Airlines (9C, Shanghai Hongqiao), it is the sole provider of airline passenger services systems in China.