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China Eastern sets up derivatives team

CHINA Eastern Airlines has set up a commission to manage its hedging business as part of its efforts to regulate derivatives investments.

The commission, consisting of managers from the carrier, will supervise and manage all types of hedging activities and revise annual plans, the Shanghai-based airline said in its hedging guideline on the Shanghai Stock Exchange today.

The guideline is the carrier's latest move to regulate derivatives after it suffered heavy losses last year from fuel-hedging contracts.

China Eastern also formed a team to work with the commission. The team from the board secretary's office, auditing, law, financial and purchasing departments, will analyze the market and propose investment plans.

The company will hedge against oil price moves rather than take profits, so it won't conduct speculative trading, according to the guideline.

China Eastern lost nearly 14 billion yuan (US$2.05 billion) last year, with paper losses from fuel-hedging contracts standing at 6.2 billion yuan.


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