China Eastern Airlines has won shareholders’ approval for a share placement plan that will bring it a capital injection of US$1.02 billion from the government.
Reuters reports that the airline, one of China’s three major carriers, will use the funds to improve its balance sheet and strengthen its ability to continue operations, it said.
After years of robust growth on the back of a soaring domestic economy, China’s airlines face falling passenger demand, intensifying competition and heavy cost pressures as the world’s third-largest economy slows with the global recession.
CargoNews Asia reported China Eastern and its peers Air China and China Southern Airlines all predicted losses for 2008, and will disclose detailed figures in their annual financial reports, scheduled for release before April 30.
China Southern Airlines’ shareholders also approved a share placement that will bring it an injection of $438.6 million in government funds.
Both China Eastern and China Southern will issue shares to their state-owned parent companies, which have already secured funds from the government.
Recently appointed China Eastern Chairman Liu Shaoyong has set a target to cut his company’s losses significantly in 2009, with the hope of breaking even in 2010.