China Eastern Airlines

Chinese carrier pax traffic to exceed 300 million in FY2012 as double-digit pax growth returns

China’s aviation market is poised for a memorable year in 2012, as Beijing likely eclipses Atlanta as the world’s busiest airport (expected in 2H2012) and double-digit traffic growth rates return. Chinese carriers are expected to report a 10% increase in passenger traffic this year to 320 million passengers, according to industry regulator, the CAAC, following growth of 9.2% in 2011.

Some 21 airports in China handled more than 10 million passengers in 2011, five more than 2010 – and more are expected to join the ‘10 million+ club’ in 2012. Eight Chinese airports handled more than 20 million passengers last year. 10 years ago, Beijing was the only Mainland Chinese airport handling over 20 million passengers (with 24.2 million passengers in 2001), while Guangzhou Baiyun and Shanghai Hongqiao (both with 13.8 million passengers) were the only two other airports in China with over 15 million annual passengers.

China Eastern to shift some international capacity back to the domestic market amid bleak outlook

China Eastern Airlines’ decision to cancel its orders for 24 B787s, replacing them with 45 smaller B737NGs, reflects a shift in strategy by the carrier and its intention to focus more on short-haul (domestic and regional) operations. The cancellation of the B787 order, one of the largest to date, also reflects its frustration with extended development delays to the B787 programme.

The move came as no surprise. Prior to the order switch announcement, China Eastern executive director Luo Zhuping said the carrier was considering changing its order book to acquire smaller aircraft in light of the outlook for international passenger and cargo demand. It also signals that China Eastern, newly installed in the SkyTeam Alliance, will look to partners to extend its long-haul international network while bulking up its short-haul network. This is a lower risk strategy. Fellow SkyTeam member, China Southern, meanwhile appears to have a bigger risk appetite with its ambitious international expansion plans. China Southern is more exposed to the developing high speed rail network than China Eastern.

China Eastern Airlines reports fall in operating profits, outlook cautious

China Eastern Airlines, China’s third largest carrier by market value, has reported a fall in operating profits as costs outpaced revenue growth. Chairman Liu Shaoyong also cautioned the carrier’s full year performance would reflect the uncertain global economic conditions. Concerns also centre around the widely expected interest rate rise in China, which would increase the company's financial burden, in addition to continued high fuel costs.

China Southern Airlines’ first half profit jumps 33%; fleet and international expansion ahead

China Southern Airlines reported a 33% year-on-year increase in net profit to CNY2.76 billion (USD431.6 million) in 1H2011 (six months ended 30-Jun-2011) supported by one-off gains and “robust growth of domestic market demand stimulated by a fast growing Chinese economy.” Operating profit increased by a faster pace, by 43% to USD396.1 million, for an operating profit margin of 6.1%.