China Eastern Airlines (MU) plans to introduce a strategic investor to adjust its capital structure, paving the way for internal integration and strategic restructuring, according to MU chairman Liu Shaoyong.
The Shanghai-based carrier had planned to introduce Singapore Airlines as a strategic investor but was blocked by Air China. “It is our focus to make internal integration this year,” Liu said. “First we need to adjust capital structure. So we still stick to our plan of introducing a strategic investor and currently we are negotiating with many companies on this issue,” he said.
Liu said MU is facing pressure in the 2012 first-half because of the European debt crisis and slowdown of Chinese economic growth. “For example, we boosted our capacities by 7.7% during the Chinese traditional Spring Festival [late January] but passenger boardings only increased by 3.6%,” Liu said, adding that cargo traffic “plummeted 20% in January” compared to the same period last year.
According to Liu, the growth rate of passenger traffic on short-haul routes [is] higher than long-haul routes and “West China’s market is growing faster than East China’s market.” For this reason, he said the Shanghai-based carrier would explore the market potential of neighboring countries and West China this year. “But we will further explore international market to open more new international routes in the long run,” Liu said.
Liu is optimistic that the air transport market will pick up in the second half of this year. “So we have to make strategic restructuring from a traditional carrier to become a modern air service operator by which to extend our business to the whole supply chain, such as tourism and express delivery,” Liu said.
The carrier is adjusting its fleet structure as it has “phased out its MD-90s over the past two years and right now we are gradually phasing out [the] A340,” Liu said.
Article Source : ATW Daily News
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