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| Competition, Fuel Cost Hit China Eastern Airlines |
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China Eastern Airlines has become the only one of the country's Big Three airline companies to post a loss for 2006. The result was mainly blamed on increasing competition and rising fuel costs. The Shanghai-based carrier reported a loss of 2.78 billion yuan (US$356.4 million), or 0.57 yuan a share, under Chinese accounting standards in its annual report released yesterday. It earned 60.47 million yuan in 2005. "The huge loss by China Eastern is still somewhat surprising to me even though the loss had been anticipated before the annual report," said Ma Ying, an industry analyst at Haitong Securities. "Rising jet fuel costs, more intense competition from home and abroad, as well as its own management, might help explain the deficit." Jet fuel cost China Eastern a total of 13.53 billion yuan, an increase of 52.26 percent from 2005, following expansion of capacity, the company said. Revenue reached 36.8 billion yuan last year, a 39 percent increase from 2005, and total traffic volume jumped 28.47 percent to 69.31 billion ton-kilometers, the carrier said. The carrier, which operated 423 routes - 105 international, 299 domestic and 19 regional (to and from Hong Kong) - with a fleet of 205 aircraft, flew 35 million passengers in 2006, an increase of 44.25 percent from a year earlier. Passenger load factor reached 71.34 percent in the same period, as compared to 69.39 percent in 2005, the company said. China Eastern said it will introduce 20 more planes - all to be delivered and put into use by the end of the year - as part of its plan to further expand capacity. Meanwhile, the company will make continuous effort to optimize its network and offer more attractive products to flyers to enhance overall competitiveness. Guangzhou-based China Southern Airlines, the country's No. 1 carrier, earlier reported it earned 118 million yuan, or 0.03 yuan a share, last year after recording a loss of 1.794 billion yuan in 2005, as gains from a stronger yuan offset high jet fuel costs. And Air (Shanghai Daily April 23, 2007)
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