Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/sp/article/2008/200811/20081112/article_380295.htm
Airline in cost-cuts bid
Created: 2008-11-12
CHINA Eastern Airlines Corp is bidding to cut energy consumption by 6.79 percent this year to save costs.
In the first 10 months of this year, the Shanghai-based carrier consumed nearly 3 million tons of standard coal, totaling 15.44 billion yuan (US$2.2 billion), it said yesterday.
Consumption of jet fuel, a key component of the airline's costs, accounted for 98.36 percent of its total energy consumption.
The country's third-largest carrier is also taking about a tenth of its fleet out of service as the global economic slowdown cuts demand for travel in China.
The airline has grounded more than 20 planes as it cuts unprofitable routes, Board Secretary Luo Zhuping said. The airline has also formed a management team to study further cost cuts and the effects of the financial crisis.
China Eastern joins AMR Corp's American Airlines and UAL Corp's United Airlines in grounding planes as the global economic slowdown spreads to Asia, damping demand for business and leisure flights.
The airline, which has 15 times more debt than equity, slumped to a record third-quarter loss after carrying fewer passengers and paying more for fuel.
"China Eastern has to try everything it can to stave off bankruptcy," said Jack Xu, an analyst at Sinopac Securities Co in Shanghai.
The airline fell 6.9 percent, the biggest drop in two weeks, to HK$0.94 (12 US cents) on the city's stock market. The shares have lost 88 percent this year.
Domestic air travel won't recover until the second half of next year, Liu Shaoyong, chairman of China Southern Airlines, the nation's largest carrier, said earlier this month.
In the first 10 months of this year, the Shanghai-based carrier consumed nearly 3 million tons of standard coal, totaling 15.44 billion yuan (US$2.2 billion), it said yesterday.
Consumption of jet fuel, a key component of the airline's costs, accounted for 98.36 percent of its total energy consumption.
The country's third-largest carrier is also taking about a tenth of its fleet out of service as the global economic slowdown cuts demand for travel in China.
The airline has grounded more than 20 planes as it cuts unprofitable routes, Board Secretary Luo Zhuping said. The airline has also formed a management team to study further cost cuts and the effects of the financial crisis.
China Eastern joins AMR Corp's American Airlines and UAL Corp's United Airlines in grounding planes as the global economic slowdown spreads to Asia, damping demand for business and leisure flights.
The airline, which has 15 times more debt than equity, slumped to a record third-quarter loss after carrying fewer passengers and paying more for fuel.
"China Eastern has to try everything it can to stave off bankruptcy," said Jack Xu, an analyst at Sinopac Securities Co in Shanghai.
The airline fell 6.9 percent, the biggest drop in two weeks, to HK$0.94 (12 US cents) on the city's stock market. The shares have lost 88 percent this year.
Domestic air travel won't recover until the second half of next year, Liu Shaoyong, chairman of China Southern Airlines, the nation's largest carrier, said earlier this month.
Agencies/Shanghai Daily
Copyright © 2001-2009 Shanghai Daily Publishing House