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Airline soars on innovation

By Wang Ying | China Daily Africa | Updated: 2016-11-27 15:04

China Eastern transforms itself from a debt-laden carrier to a profit-making group with clear horizons

It took one year for China Eastern Air Holding Co to transform from a debt-laden group to a profit-making one.

And during the period from 2009 and 2015, its net assets surged from minus 10 billion yuan ($1.45 billion; 1.36 billion euros; 1.16 billion) to 53.99 billion yuan in the black.

The extraordinary U-turn is credited by senior executives to constant reform and development, which remains the key to the Shanghai-based State-owned group's pursuit of loftier achievements.

 Airline soars on innovation

Flight Attendants in a China Eastern Airlines simulator in Shanghai serve visitors. The carrier will have a fleet of more than 820 planes by 2020. Photos by Yin Liqin / For China Daily


"We once faced an extremely difficult situation," says Wang Haitao, deputy head of the group's strategic development department.

"At the end of 2008, China Eastern's debt-to-asset ratio reached 105 percent and the debt ratio of our listed arm, China Eastern Airlines, hit 115 percent."

Apart from the negative effects of rising fuel prices and falling demand, the root of the problem was that internal reform was not fully carried out, Wang says.

After reforming for seven consecutive years, the group posted a net profit of 6.2 billion yuan in 2015, up 104 percent from a year earlier. Its return on equity, or return on net worth, also posted a higher ranking among global airlines groups.

The airline released its latest reform plan this year and said it was ready to let reform play a greater role during the next five-year plan.

Planned reforms include establishing the group's own management board by the end of this year, with a guarantee its role won't overlap with that of the listed arm.

The group, Wang says, plans to embrace the Internet-Plus era, with innovation in products, technologies and business methods.

The group wants to strengthen the competitiveness of its listed arm, China Eastern Airlines, and consider introducing strategic investors to boost the vitality of the company.

In 2015, China Eastern sold a 3.55 percent stake in China Eastern Airlines to US carrier Delta Air Lines.

In the first nine months of this year, China Eastern saw its capacity in North America soar 65 percent year-on-year, says Cheng Junhui, an official from the company's passenger transportation market committee.

The company signed an agreement with online trip planning and activities site International in April to expand into the tourism industry.

The group also made a successful trial of online retailing, with its online ticket sales revenue expected to reach 8.5 billion yuan by the end of 2016, according to Wei Zhilin, general manager of China Eastern's e-commerce unit.

China Eastern Airlines will have a fleet of more than 820 planes by 2020. Its passenger traffic will reach 150 million per year and its cargo and mail volumes will reach 1.6 million metric tons per year.

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