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China Eastern may seek further govt assistance

By Yang Zhen (chinadaily.com.cn)
Updated: 2008-12-25 12:44

China Eastern Airlines, the country's third largest carrier, said on Dec 24 that it would seek an adjustment to the government's 3 billion yuan ($438 million) capital infusion plan.

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The Shanghai-based airline may seek an additional cash injection from the government, National Business Daily quoted an unnamed source as saying.

China Eastern said on Dec 10 that it would issue both domestic A-shares and Hong Kong's H-shares to its parent company to obtain the government-injected 3 billion yuan.

The parent company, China Eastern Air Holding Co, "intends to make material adjustments to the subscription plan," the airline said in a statement to the Hong Kong stock exchange on Dec 24.

Trading of the company's A-shares is suspended today, and will resume on Dec 30.

Meanwhile, China Eastern secured a 10 billion yuan credit from Bank of Communications on Dec 24.

The carrier has been struggling with mounting debts and declining travel demands due to the economic slowdown. It recorded a 2.33 billion yuan loss in the first three quarters of 2008, and its debt-to-asset ratio hit 98.49 percent at the end of September this year.

The first round of the 3 billion yuan government cash injection would reduce the carrier's debt-to-asset ratio by 3.77 percentage points to 94.72 percent, said Luo Zhuping, board secretary of China Eastern.