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Penalties may cost China Eastern $58m in revenue

(Agencies)
Updated: 2008-05-05 14:41

China Eastern Airlines is estimated to lose 405 million yuan ($58 million) in revenue this year after the country's aviation watchdog cut its routes and reduced its flight frequencies.

Related readings:  China Eastern Airlines apologizes for flight returns incident  China Eastern Airlines fined for earlier flight disruption  China Eastern to compensate affected passengers  China Eastern Airlines admits pilots' deliberately return on 21 flights

The Civil Aviation Administration of China suspended the carrier from flying two routes in southwestern Yunnan Province from yesterday. It has already cut the number of flights on six Yunnan routes the airline operates by between two and six daily from April 26.

"The suspension will cost the company 187 million yuan this year and other adjusted routes will cost it 218 million yuan," the carrier said in a statement to the Shanghai Stock Exchange on April 29.

Last year, China Eastern, the country's third-largest carrier, made 660 million yuan in revenue on these routes, accounting for 1.52 percent of its main business income, the statement said. The carrier said it would use the idle aircraft on other routes and seek government permission to resume flying the suspended routes as soon as possible.

The aviation regulator gave the carrier's Yunnan routes to four rivals - Air China, Shenzhen Airlines, Lucky Air and China West Air - from yesterday.

China Eastern will also face a fine of 1.5 million yuan for its part in the controversy.

In a separate statement, the carrier said it earned 211 million yuan in profit in the first quarter, versus a 510.9-million-yuan loss a year earlier, and its revenue rose 14 percent to 10.6 billion yuan.

It attributed the growth to currency-exchange gains, which cut the value of its US dollar-denominated debt, and a 4.8 percent rise in passenger traffic in the period.

Meanwhile, Hainan Airlines, the country's fourth-largest carrier, also said that its first-quarter profit surged 460 percent to 286.7 million yuan, or 0.08 yuan per share, and revenue rose 3.4 percent to 3.57 billion yuan on a stronger yuan.