China Eastern Airlines enjoyed a boost in operating and net profit last year while strengthening its cash position, but the coronavirus pandemic is creating “significant uncertainty” in 2020.
The Shanghai-based carrier’s operating profit gained 8.3% to CNY10 billion ($1.4 billion) for the year ended 31 December 2019. Net profit increased 18.3% to CNY3.2 billion.
These figures came from revenues of CNY121 billion, up from CNY115 billion in 2018.
China Eastern reported cash and cash equivalents of CNY1.4 billion at the end of 2019, compared to CNY646 million at the end of 2018.
The outlook for 2020, however, is not so clear, as the coronavirus pandemic has created “significant uncertainty” for its domestic and international business.
“[T]he general impact on the operation and financial condition of the group for the year cannot be precisely predicted currently,” it says.
Throughout 2019, China Eastern, which says it has been “continuously practising the vision of green development and optimising its fleet structure in recent years”, introduced 44 aircraft to its fleet and retired one aircraft.
“With the introduction of new aircraft, such as A350-900, B787-9 and A320neo, the group’s fleet age structure still continues to remain young,” it says. At period-end, the company’s fleet had an average age of 6.4 years.
The airline adds that the daily utilisation rate of its passenger jets increased by 0.12h per aircraft year-on-year to 9.55h.
As at 31 December 2019, the group operated a fleet of 734 aircraft, comprising 723 passenger aircraft and 11 business aircraft held under trust. Among these are 14 737 Max aircraft, grounded since March 2019.
This has only been compounded by the worldwide grounding of passenger jets as the coronavirus crisis wipes out air travel demand.
China Eastern originally planned to introduce 11 Boeing 737 Max 8s in 2019, ten of which were not delivered by the end of the year. It was also planning to introduce 34 and 12 737 Max 8s, respectively, and retire 12 and eight 737-800 or 737-700 aircraft, respectively, in 2020 and 2021.
The company says: “The group is negotiating with Boeing regarding the time for resumption of operation and delivery of B737 Max 8, which is still with greater uncertainty.”
Between 2020 and 2022, China Eastern had planned to introduce 69 aircraft and retire 12, and that schedule is now subject to change with the coronavirus pandemic.
“The group and its suppliers have proactively negotiated and adjusted the progress for the introduction of aircraft under the influence of Covid-19,” it says.
“The planning for the introduction and retirement of aircraft will be subject to timely adjustment based on the changes in external environment and market conditions, and flight capacity allocation of the group.”