China Eastern maintains robust profit in 2011
Published: January 12, 2012
China Eastern Airlines A320. By Rob Finlayson
China Eastern Airlines (MU) parent China Eastern Air Holding (CEAH) reported 2011 net income of more than CNY5 billion ($ 793 million), a slight increase over a net profit just under CNY5 billion in 2010.
Though earnings didn’t grow significantly in 2011, MU was able to maintain the large profit jump achieved in 2010 ( ATW Daily News, April 1, 2011 ). Speaking at the company’s annual conference, CEAH general manager and MU chairman Liu Shaoyong credited the continued profitability to a “hub effect.” The carrier is building Shanghai as its multipoint international hub while Kunming serves as its regional hub, a strategy Liu believes is serving MU well. Also, he said, SkyTeam membership enabled the carrier to enjoy “a remarkable route network effect through cooperation with other member airlines” ( ATW Daily News, June 23, 2011 ). CEAH said other subsidiaries also contributed to the result.
CEAH did not disclose 2011 operating revenue and expenses. Annual MU passenger boardings rose 5.7% year-over-year to 68.8 million with an average load factor of 78.8%, up 0.8 point compared to 2010, while cargo traffic volume stayed flat at 1.5 million tonnes. Average daily aircraft utilization increased 0.1 hrs. to 9.84 hrs.
Looking ahead, Liu warned that the worsening global economic outlook would increase uncertainties in the airline industry ( ATW, Jan. 1 ). “In China, it won’t be easy for Chinese carriers to maintain consecutive growth in [the] domestic air transport market in 2012, which would lead to reduction of net profit reported by domestic carriers [this year] ,” Liu said. He expects MU’s international routes and cargo business to be negatively impacted by global economic sluggishness in 2012.