'Keep the debt ratio down' – Spring Air

Spring Airlines always keeps its debt ratio below 50 percent and never owes a penny of debt to airports and fuel providers.

In a recent interview with the press, its chairman Wang Zhenghua reassured the public that his company is in very good standing with regard to cash reserves.

Wang Zhenghua, Chairman of China's budget airline Spring Air [China.org.cn]

He explains that the company's low debt ratio, 40-50 percent, as compared to the 70-80 percent, that is often seen in other air companies, is mainly a reflection of its policy with regard to future aircraft purchases, and the company's reluctance to invest in unnecessary infrastructure like luxurious office buildings.

In view of the current gloom surrounding the country's aviation industry, Wang Zhenghua goes on to point out that central government cash injections to state-owned air companies distorts the market and interferes with the existing profit distribution pattern. Therefore, state-owned airlines are often seen to be offering far lower prices than "budget" airlines like Spring Air.

Finally, Wang Zhenghua suggests the authorities grant some subsidies to international airlines, so that private lines like his own can develop their international operations.

(China.org.cn by Maverick Chen, March 26, 2009)