Bank of Communications Wednesday agreed to provide China Eastern Airlines 10 billion yuan (US$1.5 billion) to ease the carrier's working capital.
"The aviation industry faces unprecedented challenges amid the financial turmoil, which has also affected our operations. BoCom has decided to expand our credit line to ease our financial pressure," the carrier, based in Shanghai, said Wednesday.
Liu Shaoyong, the new chairman of the carrier, attended the signing ceremony at which the airline's new general manager Ma Xulun signed the loan agreement with the bank.
China Eastern, the country's third-largest carrier, has been cooperating with Bank of Communications since 1999 in short-term foreign currency loans, aircraft leasing loans and electronic banking business, among others.
The carrier bucked the stock market's downward trend yesterday to jump 9.91 percent to 4.66 yuan in Shanghai on media reports that the government's attitude toward its merger with smaller rival Shanghai Airlines is positive.
Shanghai Airlines rose 6.98 percent to 5.06 yuan yesterday. The Shanghai Composite Index fell 1.76 percent to 1,863.80 points.
Shanghai Airlines may also get a cash injection from the government before merging with China Eastern, the Shanghai Securities News quoted an unidentified government official as saying yesterday.
The official said Shanghai's government may swap its shares in Shanghai Airlines for China Eastern stock, and he added the government's cash injection in Shanghai Airlines will be implemented soon.
Shanghai Airlines' chairman Zhou Chi told media earlier this month that the carrier will apply for financial aid from the government.
The company had also said in an earlier statement that it needs a cash injection because of worsening conditions caused by the financial crisis.
The parent of China Eastern has got 3 billion yuan from the government and the carrier will issue new shares.
China has rolled out 10 steps to help domestic carriers fight the slowing economy, including injecting funds. The parent of China Southern Airlines has secured 3 billion yuan from the government.
(Shanghai Daily December 25, 2008)
