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Refund ensures profit for airline

AFTER three straight quarters of losses China Eastern Airlines returned to profit in the first quarter of this year, helped by a refund from an aviation construction fund and a narrower paper loss in fuel hedging contracts.

But its first quarter profit plunged 80.98 percent to 40 million yuan (US$5.86 million), or 0.008 yuan a share, from the same period a year ago, the airline said in a statement to the Shanghai Stock Exchange yesterday. Its revenue dropped 15.68 percent to 8.95 billion yuan.

The refund from the fund by the Civil Aviation Administration of China helped raise China Eastern's non-operating revenue in the period, but the carrier didn't provide the amount. Its paper losses in fuel hedging contracts narrowed by 422 million yuan, the statement said.

"We estimated the refund from the aviation construction fund totaled 800 million yuan," said Li Pan, an analyst at BOC International, adding that without the refund the carrier would have lost 0.26 yuan per share. "The strong rebound in domestic air traffic and lower fuel prices will benefit the carrier more during the peak season."

Liu Shaoyong, chairman of the country's third-largest carrier, said yesterday that it will boost cooperation, such as code-sharing with other airlines to cover more countries and regions.

The carrier is the official airline of the 2010 World Expo forum.

Liu also said that the carrier is studying which aviation alliance it will join and will announce its decision by the end of June.

Some media have quoted Luo Zhuping, board secretary of China Eastern, as saying the carrier plans to join Skyteam in June. But Luo denied yesterday that he said that.


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