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China Eastern to acquire 10pc of Air France-KLM

STATE-OWNED China Eastern Airlines is set to purchase a 10 per cent stake in Air France-KLM for about EUR375 million (US$438.5 million) as it moves to expand its network in Europe.

American carrier Delta will also acquire a 10 per cent stake in Air France-KLM, the statement to the Hong Kong stock exchange said, according to AFP.

The "three companies will build a global network of airlines and will provide more convenient, efficient and high-quality travel services for passengers around the world", the statement said, adding that the deal will also allow China Eastern "to extend and expand its route network", develop new markets and improve its brand image.

China's Civil Aviation Administration has encouraged mainland airlines to build up their presence abroad and become internationally recognised brands.

Beijing has traditionally encouraged companies to invest overseas to find new markets, access technology and increase China Inc's influence, although authorities have recently taken a tougher stance as concerns grow over capital flight and unsound acquisitions.

The deal will "give Air France-KLM a European leadership position on Shanghai, the main business market in China," the European carrier said.
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