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China Eastern Airlines reports huge loss in 2008

by Staff Writers
Shanghai (AFP) April 16, 2009
China Eastern Airlines said it suffered a net loss of 15.3 billion yuan (2.2 billion dollars) last year due to falling passenger numbers, rising fuel costs and bad bets on fuel hedging contracts.

The country's third largest carrier, which posted a net profit of 378.6 million yuan in 2007, said its revenue declined 3.4 percent to 41.1 billion yuan last year.

"The global financial crisis... has resulted in a rapid decline in demand on the international air transportation market which has (had) a greater impact on the group's international business," it said in a statement late Wednesday.

The company said its total operating costs increased by 32.5 percent to 56.8 billion yuan. Costs of aviation fuel, which accounted for around one third of its operating costs, rose 22.3 percent to 18.5 billion yuan.

The company also recorded an expected loss of 6.2 billion yuan from fuel hedging due to "sharp fluctuations in international oil prices."

All major Chinese airlines have been hit by shrinking passenger traffic due to the slowing economy and bad bets on fuel hedging contracts amid volatile oil prices.

But China Eastern, the weakest of China's three biggest airlines, received a seven-billion-yuan bailout from the government last year and the parent of the struggling carrier said last month it would seek more government aid.

China Southern Airlines, China's biggest carrier, said Tuesday it also swung to a net loss, of 4.8 billion yuan last year. Flagship Air China is scheduled to announce 2008 results late Thursday.

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