Singapore Airlines said on Tuesday it was still in talks with China Eastern over acquiring a stake, as it seeks to get a foot into the world's fastest-growing aviation market and offset slower demand in the Americas.
The world's second-biggest carrier by market value is seeking growth in new markets, after reporting the first signs of a drop in passenger demand in February.
"We are still in talks with China Eastern," Singapore Airlines spokesman Stephen Forshaw said on the sidelines of an event to launch the first commercial flight of the Airbus A380 to London.
"We will continue a dialogue with them, but the question of when we may go back to shareholders and how that will take place is a question for China Eastern and not for us," he said.
Singapore Air's bid for a stake in China Eastern at HK$3.80 per share was rejected by the mainland carrier's shareholders in January after Air China made a counter-offer of HK$5. Air China on Tuesday maintained its offer.
China Eastern's Hong Kong-listed shares spiked 12.4 percent in early trade, but reversed the gains to lose 3.2 percent by midsession to HK$3.36.
Singapore Air shares slipped 0.4 percent in line with the broader market, while rival Air China was down 6.1 percent.
Merrill Lynch analyst Paul Dewberry on Tuesday cut his price target for Singapore Air shares but maintained a "buy" rating, and cited as a risk the carrier "purchasing a China Eastern stake at significant premium to its previously offered price".
SIA's Forshaw said Singapore Air was committed to its offer.
"China Eastern has agreed to our bid and are supportive of our bid. They've rejected the bid for Air China and I think that makes it very clear as to what their intentions are," he said.
China Eastern on Feb 26 formally rejected a proposed tie-up with flag carrier Air China, and pledged to instead continue seeking another strategic investor.
Singapore Airlines, currently the only commercial carrier to operate the A380, said its delivery schedule for the world's largest passenger plane was on track. It has 16 of the superjumbos on order and expects final delivery by 2011.
But it acknowledged for the first time on Monday a softening in demand from its Americas routes, which dragged down overall February passenger load to 76.8 percent, down from 79.8 percent a year ago.
The carrier, which derives the bulk of its revenues from premium travelers, remained positive even as growth in demand is expected to slow this year on fears of a U.S. recession.
"We will have to see as we go along how the whole situation turns out, but I think right now that it (business travel) is holding up quite well," said Singapore Air Executive Vice President Huang Cheng Eng.