Hedging losses, now warning of earnings drop

By Aaron Pan | January 12, 2009, Monday |

Print Edition

CHINA Eastern Airlines Corp, the nation's third-largest carrier, said it lost around 6.2 billion yuan (US$906 million) on fuel hedging contracts and warned it will post a "significant" loss in earnings.

Fair-value hedging losses totaled US$14.2 million in December alone, the company said in a Hong Kong stock exchange statement yesterday. China Eastern said it expects to suffer "significant operating losses" in 2008.

Fuel-hedging losses have compounded the effects of slowing demand on airlines' earnings, as the global recession damps air travel. Carriers worldwide have suffered hedging losses after anticipating a continued rise in fuel prices. Jet-fuel prices doubled in a year to a record in July, before tumbling in line with declining oil prices, Bloomberg News said. Fuel prices tumbled 70 percent in less than six months.

"A pronounced global economic recession since the second half of 2008 led to a drastic decrease in air transportation demand," the Shanghai-based company said. "The civil aviation industry is facing a crisis."

Transport

About Us
|
Terms of Use
|
RSS
|
Privacy Policy
|
Contact Us
|
Shanghai Call Center: 962288
|
Tip-off hotline: 52920043

沪ICP证：沪ICP备05050403号-1
|
互联网新闻信息服务许可证：31120180004
|
网络视听许可证：0909346
|
广播电视节目制作许可证：沪字第354号
|
增值电信业务经营许可证：沪B2-20120012

Hedging losses, now warning of earnings drop

Email this to your friend