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China Eastern Airlines said it was in talks to sell off a 20-percent stake to a foreign carrier, after announcing that higher fuel and other operating costs forced it into the red last year.
Li Fenghua, president of the Shanghai-based carrier, said the group had been in negotiations for six months on the sale of the stake to an unidentified foreign carrier.
"I expect to sign an agreement by the end of this year, the sooner the better," Li said Tuesday, adding he hoped to raise 3 to 4 billion yuan (US$375 to US$500 million) from the sale.
His comments came after the company, one of China's three biggest airlines, reported a net loss of 467.31 million yuan last year due to higher aviation fuel and other operational costs, a sharp turnaround from 2004.
The Shanghai and Hong Kong-listed company posted a profit of 320.7 million yuan in 2004, based on the international accounting standards reported to the Hong Kong stock exchange.
"Global crude prices have stayed at high levels since 2004, raising the cost to the world's aviation sector and our company as well," the airline said in its results statement.
China Eastern recorded overall operating losses of 2.3 million yuan last year, compared with operational gains of 1.49 billion yuan in 2004.
The steep losses were significantly worse than the 50 percent fall in profits forecast by the group. Analysts said before Li's announcement that the results would likely force the airline to seek refinancing.
(Shenzhen Daily April 13, 2006)
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