Juneyao Air (HO, Shanghai Hongqiao) and China Eastern Airlines (MU, Shanghai Hongqiao) have cemented a cross-shareholding partnership, which they said would strengthen their positions in eastern China, the Shanghai Daily has reported.

The groups that control the two Shanghai-based carriers signed an agreement on September 6 to become strategic partners and forge "cooperation on shareholdings and businesses". The move follows the completion of what the partners have called the biggest share transactions in the country's civil aviation sector, totalling CNY13 billion yuan (USD1.82 billion).

On September 3, privately owned Juneyao announced a non-public offering of shares resulting in state-owned China Eastern's stake rising from 7% to 15%, while the proportion of Juneyao Group directly holding the carrier's equity reduced to a still-controlling stake of 51.92%.

As previously reported, in August, Juneyao subscribed to a China Eastern non-public issue of shares so that Juneyao Group and related companies now hold a 10% stake in China Eastern.

The mutual investment comes as the Chinese government urges more state-owned sectors to open up to private investment, which it thinks will make its companies more globally competitive.

China Eastern and Juneyao will deepen cooperation on scheduling, maintenance, logistics, training, and sales and marketing, said Liu Shaoyong, president of China Eastern Air Holding Company, also known as China Eastern Group. The aim is also to enhance both carriers' global networks and help strengthen Shanghai as an international hub, added Li Yangmin, general manager of China Eastern.

Combined, the two partners already control half of the seats in the Shanghai market, Corrine Png, chief executive of the Singapore-based transport research firm Crucial Perspective, told Reuters.

Juneyao, meanwhile, which recently took delivery of its fifth B787-9 and opened its first intercontinental route to Helsinki Vantaa, sees the partnership as a way of boosting its competitiveness and raising its brand on an international scale - and also to "set an example of cooperation between state-owned and private enterprises", said Wang Junjin, president of Juneyao Group and Juneyao Airlines.