To shore up its balance sheet, China
Eastern (CEA) announced the sale of up to RMB1.35 billion new A shares
and 490 million new Hong Kong dollar-denominated H shares to parent,
China Eastern Air Holding Co.

We continue to believe the fundamental
outlook for airline carriers remains weak and a CEA/SAL tie-up will not change
this. Both CEA and SAL shares are subject to special treatment, meaning that
daily share price movements are limited to 5% on the Shanghai Stock

Moreover, the shares could be delisted should CEA and SAL
continue to sustain losses in 2009. We reiterate our Underperform recommendation on China Eastern shares.Zacks Investment Research