CHINESE AIRLINES SEEK EMERGENCY AID

Published on November 18, 2008 by admin

China Eastern Airlines and China Southern Airlines, two of the country’s three largest state-run carriers, have applied for emergency government subsidies to keep them airborne in the face of rising costs and falling passenger demand.

The airlines told the Financial Times that they had applied to the government for the subsidies after industry-wide losses in the first 10 months of the year totalled Rmb4.2bn ($615m).

The Shanghai-listed shares of China’s five largest listed state-run airlines rose by the 10 per cent daily limit yesterday after state media reported that China Eastern and China Southern would probably receive Rmb3bn each in emergency subsidies.

Both airlines said that they had not been told how much they would receive or when a decision on the pay-outs would be made.

However, a China Southern official, who asked not to be named, said: “Given the background of the global economic recession, it is crucial that we get this money.”

Following years of double-digit growth in the industry, China’s airlines have been hit hard by a slump in passenger demand that started in the months before the Beijing Olympic Games in August.

The number of airline passengers within China rose 2.4 per cent in the first 10 months, far below the government’s forecast of 14 per cent annual growth.

Officials have laid most of the blame for the slump on natural disasters such as the May 12 Sichuan earthquake – but analysts say that the slumping economy and stringent security operations and travel bans during the Olympics are the main reasons for the drop in demand.

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