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China Eastern may take three years to be profitable: chairman
Shanghai (AFP) Feb 3, 2009 The new chairman of China Eastern warned Tuesday the struggling airline, the country's third-largest, may take up to three years to become profitable again. Chairman Liu Shaoyong would not confirm reports of possible merger talks with Shanghai Airlines but told reporters that they were "not a bad thing" and that his company was "open to tie-ups and mergers." Liu said the airline was likely to continue losing money in 2009, after it warned last month that a "significant loss" for 2008 was expected due to fewer passengers and bad bets on fuel hedging contracts. "The company aims to break even or be slightly profitable next year, I am confident that the company will become profitable by the third year," Liu said. He spoke after a board meeting to approve his appointment as chairman. "Our revenue has failed to match our expenses," Liu told reporters. "The target for 2009 is to substantially stem losses," he said. President Ma Xulun said the airline would cut at least three billion yuan (438.6 million dollars) in spending, in part by scaling back expansion plans. He said the carrier would introduce only 13 new planes in 2009 -- less than half originally planned. The airline has discussed with suppliers, including Airbus and Boeing, about delaying the delivery of the 16 other planes, Ma said. The carrier faces an unaudited loss of about 6.2 billion yuan alone due to fuel hedging contracts, the carrier said in a statement to the Shanghai Stock Exchange. Liu said the risks of further losses from fuel hedging contracts would be lower for 2009. He also said the airline was hoping for more emergency funds from the government in addition to a seven-billion-yuan capital injection Beijing promised in December. China Eastern also received a 5.6-billion-yuan short-term loan from its state-run parent last month and had a 20-billion-yuan line of credit with banks, the executives said. The airline plans to spin off its Yunnan operations as a separate company in which it will maintain a controlling stake, the executives said. It will also sell some of its stake in regional carrier Joy Air to its joint venture partner, Aviation Industry Corp of China, they added. The airline posted a loss of 2.3 billion yuan for the first three quarters of 2008 and is expected to announce its full-year results in mid-April. The airline posted a profit of 586 million yuan in 2007. Related Links Aerospace News at SpaceMart.com
New Airbus joint-venture with China announced
Toulouse, France (AFP) Jan 30, 2009European aeronautics giant Airbus announced Friday that it is to create a new joint venture to produce parts and composite materials in China. |
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