China Eastern gets a 31 billion yuan cash bailout from the state to keep it operating as Covid-19 pandemic grounds global airlines

A subsidiary of state-owned China Life Insurance will inject 11 billion yuan into China Eastern Airline, while Shanghai Jiushi Group, another state company, will inject 10 billion yuan

China Reform Holdings Corporation and China Tourism Group, both state-owned entities, will inject 5 billion yuan each

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Travellers checking in at China Eastern Airlines' self check-in kiosks at Beijing Capital International Airport on Tuesday, August 25, 2020. Photo: Bloomberg

Published: 7:48pm, 12 Oct 2020Updated: 7:47pm, 12 Oct 2020

China Eastern Airlines will receive a cash injection of 31 billion yuan (US$4.6 billion) from four new investors as part of an equity diversification plan, the company said on Monday.

China Life Investment Holding Limited, a subsidiary of the state-owned China Life Insurance, will inject 11 billion yuan into the airline, while Shanghai Jiushi Group, another state company, will inject 10 billion yuan, according to the public filing. China Reform Holdings Corporation and China Tourism Group, both state-owned entities, will inject 5 billion yuan each.

The move is part of long-standing China’s efforts to diversify ownership structures among its state-owned enterprises and comes at a critical time after China Eastern posted a net loss of 8.5 billion yuan in the first half due to the coronavirus pandemic.

Chinese airlines have weathered the Covid-19 crisis better than most after the outbreak was brought largely under control and domestic air travel rebounded. While losses in the first half stretched to billions of dollars, air passenger capacity in Asia’s largest economy is now back around pre-pandemic levels.

A pair of China Eastern Airlines’ Boeing 737-800 planes at an airport in Taiyuan, Shanxi province on April 6, 2014. Photo Reuters

HSBC Holdings’ transport analyst Parash Jain said Monday the country’s Big 3 carriers – Air China and China Southern Airlines, along with China Eastern – should post third-quarter profits when they report later this month. China Southern announced last year that it would receive a capital injection of 30 billion yuan from three investors.

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