It means that there is still hope for a China Eastern-SIA union although the Singapore carrier, which has much to gain if it can enter China's booming air travel market, is not revising its bid.

The latest development in the six-month saga came late on Tuesday when China Eastern - based in Shanghai and listed in Hong Kong - told the stock exchange it had rejected Air China's proposal for a tie-up.

China Eastern's statement said that China National Aviation had 'failed to demonstrate' any 'sincere intentions to cooperate' with China Eastern.

Air China's parent, which already owns about 12 per cent of China Eastern, also failed to show 'that it has conducted in-depth and thorough planning in relation to its proposed cooperation with the company', said the statement.

The Shanghai airline said it will continue to look for 'strategic investors' to boost its operations and finances.

SIA's joint offer made in September with Temasek Holdings - they offered HK$7.2 billion (S$1.3 billion), or HK$3.80 a share, for a 24 per cent stake in China Eastern - is still on the table, according to SIA chief executive officer Chew Choon Seng last week.

But he emphasised that the airline had no plans to revise its bid.

SIA's offer was turned down by China Eastern shareholders early last month after China National Aviation said it was planning a counter offer of at least HK$5 a share.

Mr Shukor Yusof, an analyst at Standard & Poor's Equity Research, is not surprised that China Eastern said no to Air China.

'SIA's offer is to help revamp the carrier, turn it around and make it profitable - it would have been a win-win for both carriers. But with Air China, it is just about preventing others from having a hold in the Shanghai-based carriers,' he said.

Air China is pushing for a consolidation of the Chinese market with a merger of the big three - Air China, China Eastern and China Southern - to create a single, mega airline.

With Air China's former chairman Li Jiaxiang now chief of the Civil Aviation Administration of China - the industry regulator - analysts say this could be interpreted as a reflection of senior government support of Mr Li's consolidation strategy.

Mr Shukor expects a long- drawn-out saga, and while he does not see SIA making any new moves, China National Aviation is likely to come back with a fresh proposal for China Eastern.

How will it all end? 'Anything is possible in this business,' he said, adding that much will also depend on Beijing, which will ultimately call the shots.