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SHANGHAI—China Eastern Airlines Corp., the country’s
third-largest carrier, expects passenger traffic to
rebound in the fourth quarter after being hurt by
natural disasters and inflation.
Passenger traffic, which has fallen two months in a row
at the carrier, will likely rebound after the Olympics,
chairman Li Fenghua said after the airline’s annual
general meeting Monday.
Chinese travel demand has slowed as the country recovers
from the worst earthquake in 58 years and rising
inflation cuts the amount of money people have to spend
on leisure travel. Chinese airlines canceled some
regular services to fly aid workers to Sichuan province
after the tremor, which killed more than 69,000 people.
In
April, China Eastern posted its first drop in monthly
passenger numbers in more than three years. It carried
3.35 million passengers in April, 0.3 percent fewer than
a year earlier. In May, passenger traffic fell 8.1
percent from the year-ago period because of the quake.
Li
also expects the airline to be profitable in the first
half of this year. “There’s no major problem to report a
profit for the half,” Li said, without giving a forecast
for earnings.
“The
industry’s overall recovery still depends on the
government’s policy to boost the economy,” said Li. “The
focus has been on disaster relief.”
China
Eastern’s shareholders’ approved a plan to raise no more
than 1.4 billion yuan by selling short-term bonds
Monday. The fund will be used to support business
expansion.
China
Eastern paid 12 percent more for jet fuel, which
accounted for 41 percent of its operating costs in 2007,
according to a company filing.
“It’s
the worst time since the SARS outbreak in 2003,” said
Luo Weide, chief financial officer of China Eastern,
Monday. “Rising fuel costs are a headache for all
airlines worldwide.”
The
airline has applied to raise fuel surcharges to offset
the higher costs, Li said. The application is waiting
for the government’s approval.
China
raised the price of jet fuel for domestic routes 25
percent on June 20. International jet fuel rose 4.5
percent on June 27 in Singapore to $171.35 a barrel. The
price has more than doubled in the past year.
Bloomberg
Meanwhile China Southern Airlines Co., the nation’s
largest, and other Chinese carriers will raise ticket
surcharges on domestic flights as much as 50 percent to
help cover rising fuel costs.
The
levy on journeys of more than 800 kilometers will climb
to 150 yuan ($21.9) from 100 yuan, starting July 1, the
Civil Aviation Administration of China and National
Development and Reform Commission said Monday on a
government Web site. The fee on shorter flights will
rise to 80 yuan from 60 yuan.
The
increases follow a 25 percent rise in domestic jet-fuel
prices introduced on June 20 as part of a wider Chinese
drive to cut energy use and to cool economic growth. The
higher prices for jet-fuel, most carriers’ biggest
expense, will add about 15 billion yuan a year to
domestic carriers’ costs, according to China Southern
chairman Liu Shaoyong. |
