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Further credit secured by China Eastern

CHINA Eastern Airlines gained another 20-billion-yuan (US$2.92 billion) credit line from a domestic lender to boost its ailing business yesterday.

The Bank of China issued the credit line to the airline, which lost 14 billion yuan last year, and China Eastern will offer tailor-made services for the bank.

"The financial turmoil greatly depresses the aviation industry and China Eastern faces temporary difficulties in its operation. The credit line indicates the confidence banks have in our development," the Shanghai-based carrier said yesterday.

The country's third-largest carrier has won credit lines totaling 76 billion yuan from the Agricultural Bank of China, Shanghai Pudong Development Bank, the Bank of Communications, China Construction Bank and China Development Bank in the past half year.

China Southern Airlines, the country's largest carrier by fleet size, earlier this month also got a 20-billion-yuan credit line from China Construction Bank.

The Guangzhou-based carrier's first-quarter profit declined 71 percent to 222 million yuan, or 0.03 yuan a share, according to a statement to the Shanghai Stock Exchange yesterday.

However, the carrier would post a net loss of 0.12 yuan a share in the period excluding the central government's subsidies of 1 billion yuan. It has secured a 3-billion-yuan cash injection from the central government.

The global downturn and waning demand mean overcast skies for the domestic aviation industry, and the three largest carriers reported a combined 28-billion-yuan loss last year.

"Airline profitability remained weak into the first quarter of 2009 under pressure from further falls in traffic and sharp declines in yields," the International Air Transport Association, which represents 230 airlines, said in a report yesterday. "These factors more than offset the hedging-delayed benefits of lower fuel prices."


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