China Eastern Airlines A330-300. By Rob Finlayson
 
China Eastern Airlines (MU) chairman Liu Shaoyong has called on the Chinese government to make an $18 billion-$20 billion capital injection into China’s big three state-owned carriers to alleviate increasing financial pressure. The debt ratio of China’s big three airlines— Haikou-based MU, Guangzhou-based China Southern Airlines (CZ) and Beijing-based Air China (CA)—all reportedly exceed 70%.
 
All three carriers have previously received capital injections from Beijing. In 2008, MU and CZ received CNY3 billion ($473 million) in government aid, respectively (ATW Daily News, Oct. 31, 2008). In 2009, MU received another CNY6 billion from Beijing. In 2010, CZ and CA each received CNY1.5 billion (ATW Daily News, Feb. 23, 2010). CA received another CNY1 billion one year later (ATW Daily News, Sept. 2, 2011).
 
Liu also called on Beijing to reduce the tax imposed on domestic carriers.
 
“Chinese airlines are shouldering too heavy tax burdens. Last year China’s big three carriers paid a total of more than CNY15 billion tax, which was almost equal to the total net income reported by these three carriers last year,” Liu said.
 
Other Chinese carriers are also facing cash shortages due to rising fuel prices and the slowdown of domestic market demand.
 
Shanghai-based carriers, Spring Airlines (9C) and Juneyao Airlines (HO), are preparing to launch IPOs for their fleet expansions (ATW Daily News, Feb. 13).
 
9C will reportedly post a net income of CNY500 million in 2011 while HO will reportedly post a net profit of CNY400 million-CNY500 million for 2011.
 

SOURCE: atwonline.com
 
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