Regional Market Holds Key to China Eastern Revival

Source: Cargonews Asia    Author:    12/17/2007

Subject Concerned: Aircraft   Airlines   

China Eastern's strategy to turn the Shanghai-based carrier around will rest with improving its domestic and regional routes by using smaller planes with faster turnaround times.

This became clear when its chairman, Li Fenghua, told reporters in Hong Kong that the airline had filed plans with Beijing to buy 40 Airbus A320 aircraft and 40 Boeing 737s.

Li was in the city lobbying support from shareholders for a joint Singapore Airlines-Temasek offer for 24 percent of the airline. Shareholders will vote on the deal early next month.

China Eastern, Air China and China Southern are referred to as the mainland's "big three" carriers, although the Shanghai airline is the worst performer of the lot.

Its long-haul routes are heavy loss makers and the carrier has been in the red for most of the last five years. The airline will benefit by the injection of SIA management expertise as much as it will from the US$918.2 million it will receive for the 24 percent share.

China Eastern controls 36 percent of the Shanghai market and hopes to expand its share to more than 50 percent after the Singapore Airline deal, which is pending shareholder approval at a meeting on January 8.

Based on its current orderbook, before the new orders for A320s and B737s, China Eastern's fleet will grow by 53 percent to 322 aircraft in 2010.