AIR China's parent offered to acquire less than a 30-percent stake in Shanghai-based China Eastern Airlines for at least HK$5 (64 US cents) per share, according to the long-awaited proposal which was unveiled to the Shanghai Stock Exchange yesterday.

China National Aviation Corp Group, or CNAC, plans to bid for three billion Hong Kong-listed shares in China Eastern for at least HK$5 apiece, China Eastern told the Shanghai Stock Exchange in a statement yesterday.

"China National Aviation has no intention of holding 30-percent stake or above in China Eastern," the statement quoted the proposal as saying.

However, Shanghai-based China Eastern Airlines group said it could not respond to the proposal because it was incomplete and lacked legal validity, according to a brief statement quoted by Shanghai Securities News.

As the issue is important for stock market investors, CNAC needs to make a formal, complete proposal, the China Eastern Airlines group said.

CNAC said in the plan it is willing to cooperate with China Eastern to snare a dominant position in the world's second-largest aviation market even if China Eastern rejects the proposal.

Chinese carriers have a 44-percent share of the nation's international passenger market and less than 20 percent of its international cargo market, according to CNAC.

Beijing-based Air China will assist China Eastern to set up a hub in Shanghai rapidly, improve China Eastern's route network and optimize its resource allocation in Pudong and Hongqiao airports.

It will set up a joint cargo venture with China Eastern, codeshare and optimize the carrier's routes, capacity, maintenance and services, CNAC said.

China Eastern can gain more than HK$14.9 billion in cash from the deal and its liability to assets ratio will drop to 77 percent from 94.3 percent, CNAC said.

"The price China National Aviation offered is more attractive to shareholders than Singapore Airlines, and China Eastern can share more resources with Air China, such as routes network, than SIA," Xia Fulu, an analyst at Industrial Securities, said.

Air China's parent helped scuttle Singapore Airlines's plan to buy 24 percent of China Eastern. It owns about 10 percent of China Eastern's shares and voted against SIA's offer.

But China Eastern's chairman Li Fenghua has said it will keep pursuing a tie-up with SIA and wouldn't choose CNAC as a strategic investor.