China Eastern Airlines reported a CNY1.85 billion (USD271 million) profit in the ten months to Oct-2009, with passenger numbers rising 19.8% year-on-year, prompting GM, Liu Shaoyong, to stated that the carrier is "moving away from its difficulties" (www.163.com/China Knowledge, 10-Dec-2009). However, he stated that further reform is required. The carrier has received CNY9 billion (USD1.3 billion) in government subsidies since the beginning of the global economic crisis. The Shanghai-based company is preparing for a share placement of CNY7 billion (USD1.0 billion) by the end of 2009, to reduce the carrier's debt/asset ratio to 94.7%. The carrier has further plans to reduce this to 80% through a variety of means, with the carrier considering introducing strategic investors.
China Eastern profitable in 10 months to Oct-2009; pax up 20%; receives USD1.3 billion in subsidies
You may also be interested in the following articles...
Qantas' Asian transformation, relaunching Beijing & Melbourne-Tokyo; highest Asian activity ever
Qantas has been transforming in Asia. Its partnership with Emirates and shift of European stopover hub from Asia to Dubai drove a need for Qantas to restructure its Asia network to support the local market, and not onward connections to Europe. Widebody capacity has become available as Qantas further decreases widebody services in the domestic market, which was overcompetitive and impacted by a decline in the resource sector, which was a key corporate contract focus.
In calendar 1Q2017 Qantas will operate more flights to Asia than at any time this decade, including prior to its Emirates-necessitated restructure.
Seat capacity has reduced slightly, reflecting the use of smaller aircraft (A330s instead of A380s) but Qantas still has more seats for the local market since it no longer sells onward flights to Europe. Qantas' most recent Asian additions are the relaunching of Melbourne-Tokyo (taking the service over from Jetstar, which will instead open new flights to Vietnam) and Sydney-Beijing – an important market for its JV with China Eastern as Virgin Australia signals its intent to fly to Beijing in 2017, in partnership with HNA.
Chinese New Year air traffic a boon to airlines but reflects challenges of year-round sustainability
The Chinese New Year travel season, billed as the world's largest migration, once again fills the headlines with astounding numbers of passenger movements. Some airlines set maximums on pricing, for fear of being seen as price gouging if revenue management systems followed their normal pricing curve upwards.
Even the most sceptical investors would be forgiving for contemplating airline ownership during the travel rush. The question, and lurking problem, is what happens the rest of the year.
China's concentrated and en masse travel periods present a challenge for sustainability. Airlines local and foreign are often reduced to hoping that routes will be annually profitable based on a few weeks of travel during Chinese New Year, the brief summer peak, and the autumn holidays. With load factors consistently high, yields are weakened, either on point-to-point traffic or as Chinese airlines aggressively discount connecting/transfer traffic.
On a volume basis, international traffic remains strong, expanding by an estimated 9.3 million passengers in 2016 for 22% growth. Chinese airlines continue to pivot to the international market, and Air China now has more capacity internationally than domestically.