China Eastern Airlines and China Southern Airlines, two big players in China's civil aviation business, will each get a 3 billion yuan cash injection (about US$439 million) from the government.
A well-informed source revealed that the money, which is due to arrive by year end, will be relayed to the airlines through their parent companies. The source also said that the airlines are the first state-owned enterprises (SOE) that have received governmental financial help this time, which will reach more SOEs in due course.
Statistics show that by the end of the third quarter 2008, the asset-liability ratio of China Eastern Airlines has surpassed a staggering 98 percent, and that of China Southern Airlines has reached 83 percent. The cash injection will lower the former by 3.3 percentage points and the latter by 2.5 percentage points.
This action on the part of government is unprecedented in the last 5 years. Civil aviation in general went into the red in the third quarter. China Eastern Airlines in particular has had to reduce the number of flights and lower its staff salaries to combat its extreme difficulties.
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(China.org.cn November 17, 2008)