FOR IMMEDIATE RELEASE
August 27, 1998
China Eastern Airlines Announces 1998 Interim Results
China Eastern Airlines Corporation Limited ("Eastern Airlines" or the "Company") announced today its results for the first half of 1998. For the six months ended 30th June 1998, total revenue of the Company amounted to RMB 3.809 billion, a decrease of 3.86% compared with the same period last year. As a result, a loss of RMB 33.236 million was incurred.
During the first half of 1998, overall traffic turnover was 671 million tonne-kilometers, representing 16.67% growth year-on-year. The average daily utilisation rate was 7.4 hours, compared to 6.8 hours in the corresponding period of 1997. Passenger traffic grew 13.10% to 5.058 billion passenger-kilometers but total revenue generated by passenger traffic fell 4.4% year-on-year to RMB 3.045 billion, accounting for 79.95% of the Company's total revenue.
Domestic passenger traffic for the period was 2.362 billion passenger-kilometers, an increase of 29.57% compared with the corresponding period of 1997. Revenue generated from domestic passenger traffic amounted to RMB 1.459 billion, representing an increase of 12.75% year-on-year and accounting for 47.91% of the total revenue generated by passenger traffic.
The increase in domestic passenger traffic and the accompanying revenue was primarily the result of the Company's expanded capacity for domestic passenger traffic, which was increased by 34.61% over the same period in 1997.
For the Hong Kong routes, 652 million passenger-kilometers were recorded during the period, a 15.77% decline year-on-year. Revenue generated from the Hong Kong routes amounted to RMB 733 million, representing a drop of 23.71% compared with the same period in 1997 and accounting for 24.07% of the total revenue generated by passenger traffic.
International passenger traffic increased by 9.01% year-on-year, to 2.044 billion passenger-kilometers, as additional passenger capacity was allocated to this sector. Revenue, however, dropped 8.28% to RMB 853 million, and accounted for 28.02% of the total revenue generated by passenger traffic.
Cargo traffic increased by 25.56% year-on-year to 226 million tonne-kilometers as a result of expanded cargo capacity. However, revenue fell 4.94% to RMB583 million, accounting for 15.3% of the Company's total revenue.
The impact of the Asian financial crisis was felt during the period. Eastern Airlines' operations were affected by currency depreciations across the region and a significant slowdown in the demand for aviation services. China's domestic aviation market also recorded a drop in passenger volume during the period as a result of a softer demand attributable to economic adjustments taking place in the country and surplus capacity emerging during the period. The Company's overall load factor and yield rate weakened as a result.
For the period under review, total operating costs of the Company amounted to RMB3.606 billion, an increase of 14.35% compared with the same period in 1997. The increase was mainly attributable to higher maintenance costs and depreciation charges resulting from an expanded capacity, growth in traffic volume and the increase in fuel prices. However, the Group's cost control measures resulted in a decrease in unit cost by 4.65% (measured by Available Seat-Kilometre (ASK)).
Difficult market conditions are expected to prevail in the second half of the year as demand in the international and domestic aviation markets is unlikely to improve in the near future. The Civil Aviation Administration of China (CAAC) has announced plans in response to the weaker market conditions, including the reduction of overall traffic capacity, delaying and considering the cancellation of new orders for aircraft, and closer co-ordination among domestic airlines. These measures, coupled with a decrease in fuel prices in the second half of the year, are expected to have a positive impact on the Company's results.
As for Eastern Airlines itself, measures taken to improve competitiveness include the readjustment of flight routes and schedules, marketing initiatives such as code-sharing and frequent flyer programmes, the development of the air cargo market, and the implementation of stringent cost-control measures.
Listed on the New York Stock Exchange in February 1997, and on the Shanghai Stock Exchange in November 1997, Eastern Airlines is one of the three largest air carriers in China and the primary air carrier serving Shanghai, China's eastern gateway. As of 30th June 1998, the Company operated 131 routes, of which 112 were domestic routes (including 12 Mainland-Hong Kong routes) and 19 were international routes. Over 1,300 flights are scheduled each week covering 53 domestic and international cities. The Company owns a fleet of 66 aircraft, including 48 jet passenger aircraft with over 100 seats and one jet freighter.
|Issued by:||China Eastern Airlines Corporation Limited|
|Through:||Keith Statham Associates PR|
|Tel: 2810 8108 Fax: 2869 1022|
|Contact:||Philip Hui - dir. line 2801 0016|
THE FULL TEXT OF THE COMPANY'S FORMAL ANNOUNCEMENT OF INTERIM RESULTS CAN BE ACCESSED THROUGH THE INTERNET AT:
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