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Two major airlines lose nearly US$2.8b

TWO of China's biggest airlines lost almost 19 billion yuan (US$2.8 billion) last year as a slowing economy dampened traffic demand while surging fuel prices increased their costs.

China Eastern Airlines, the country's third-largest carrier, lost 14 billion yuan, or 2.86 yuan a share, compared with a 604-million-yuan profit in 2007, and its revenue declined 3.9 percent to 41.84 billion yuan, it said in a statement to the Shanghai Stock Exchange yesterday.

The Shanghai-based carrier attributed the loss to waning demand brought by the global economic recession and China's natural disasters as well as surging fuel prices. Its fuel costs totaled 18.49 billion yuan last year, accounting for 43 percent of business costs and were a 22.3-percent jump from a year earlier. The global crude price surged to as high as US$147 a barrel last year.

The airline flew 37 million passengers last year, a drop of 4.93 percent from a year earlier, and carried 889,000 tons of cargo, a decline of 5.39 percent.

"The worst time for the aviation industry has passed, and carriers are expected to recover this year," said Ma Xiaoli, an analyst of CITIC Securities Co. "We expect air ticket prices and passenger volumes to rebound during the peak season from April to October, and the low fuel prices will help carriers."

China Southern Airlines, the country's largest carrier by fleet size, also reported a loss of 4.82 billion yuan last year, or 0.74 yuan a share, after being profitable for two years, it said in a statement to the exchange on Tuesday.

Its revenue gained 1.17 percent to 56.43 billion yuan last year, according to domestic accounting standards.

Its fuel costs totaled 23 billion yuan last year, accounting for 42.9 percent of business costs and were a jump of 26 percent from a year earlier.


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