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Ailing carrier gets more aid as 'next step'

CHINA Eastern Airlines Corp's parent won an extra 2 billion yuan (US$292 million) in aid from the government, raising the carrier's total bailout to 9 billion yuan.

The carrier will get the funds as "the next step," Vice Chairman Li Jun said in Beijing yesterday. Chairman Liu Shaoyong also asked the state to offer more bailouts and to work out a stimulus plan for domestic airlines.

China Eastern, the nation's No. 3 carrier, won a 7-billion-yuan bailout last year as the government helped the unprofitable company pare debts and withstand waning travel demand. The airline is also in talks to cancel plane orders to slow growth as it strives to break even next year.

"No one knows how long China Eastern can survive for" without government help, said Kelvin Lau, an analyst at Daiwa Institute of Research Ltd in Hong Kong.

The carrier "needs operating cash as it's very likely to book a loss this year on slowing demand," he said.

The government may be reluctant to give further funds to carriers after injecting money into China Eastern and China Southern Airlines Co, whose parent won 3 billion yuan last year, Bloomberg News said.

"It isn't clear at the moment if the carriers will receive more bailouts this year," Li Jiaxiang, director of the Civil Aviation Administration of China, said in Beijing yesterday.

He didn't comment on a request for funds from Air China Ltd's parent. The company is seeking about 3 billion yuan, Kong Dong, chairman of Air China, the nation's No. 2 carrier, said last week.

"The government needs to figure out if the first round of bailout is enough to help the airlines survive before it can make a decision on a second round," said Jack Xu, an analyst at Sinopec Securities Asia in Shanghai.

China Eastern shareholders last month approved the sale of new shares to China Eastern Air Holding Co.


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