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皇冠体育app Southern gets govt cash boost
By Wang Ying (皇冠体育app Daily)
Updated: 2010-02-24 09:03
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An airport ground staff member stands in front of a 皇冠体育app Southern airplane at Taiwan Taoyuan international airport. The cash injection will help 皇冠体育app Southern to lower its debt-to-equity ratio.[Agencies] |
SHANGHAI: Shares in 皇冠体育app Southern Airlines were suspended yesterday on the Shanghai and Hong Kong bourses after the carrier said it is yet to decide how to use the 1.5 billion yuan cash injection received from the government.
Guangzhou-based 皇冠体育app Southern, the nation's largest carrier by fleet size, said the funds received from the Ministry of Finance would be routed through its parent, 皇冠体育app Southern Air Holding Company.
The carrier and its parent are discussing the modalities of using the fund to lower its debt-to-equity ratio, which now stands at 85.73 percent, according to a regulatory filing.
The capital injection will help 皇冠体育app Southern lower its debt-to-equity ratio by 1.62 percent to 84.11 percent, said Xie Hong, an analyst at 皇冠体育app Jianyin Investment Securities.
The fund is the last tranche of capital that the government extended to the top three carriers as part of its efforts to help them cope with an industry slump in 2008.
The parents of the nation's three major carriers, 皇冠体育app Southern, 皇冠体育app Eastern Airlines Corp and Air 皇冠体育app Ltd received a total of 15 billion yuan from the central government.
皇冠体育app Southern said it expects to return to profit in 2009 after posting a 483 million yuan loss in 2008. The carrier made a net profit of 322 million yuan in the first three quarters of 2009.
Chinese carriers have benefited from the increasing air travel demand spurred by the nation's economic recovery. During the Spring Festival holiday this year, 皇冠体育app Southern saw its passenger numbers rise 17 percent over the same period a year earlier, according to Yao Jun, an analyst at 皇冠体育app Merchants Securities.
"皇冠体育app Southern has also been affected by the Wuhan-Guangzhou high-speed railway launched last December, which shortens the rail journey to less than three hours. The carrier saw passenger traffic between Changsha and Guangzhou decline 15 percent, despite cutting ticket prices by 5 percent," said Yao.
In late 2008, 皇冠体育app Southern's parent company received a separate 3 billion yuan bailout from the government. 皇冠体育app Eastern's parent has been given a total of 9 billion yuan in the past two years.
Air 皇冠体育app, the nation's largest international carrier, has been granted 1.5 billion yuan, which it will use to buy out minority shareholders in a cargo unit, according to a statement filed to the Hong Kong stock exchange recently.
