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CKK-2005-12-NO CARGO DEAL
CKK-2016-05 - Ningbo to AMS.jpg
Formed and started operations in 1998. Domestic, regional, & international, scheduled & charter, cargo, jet airplane services.
818 Dong Fang Road
Pu Dong New Area
Shanghai 200122, China
China (People's Republic of China) was established in 1949, it covers an area of 9,560,980 sq km, its population is 1,265 million, its capital city is Beijing, and its official language is Chinese.
January 1999: Subsidiary of China Eastern Airlines (CEA) and China Ocean Shipping Group.
Operates cargo flights with MD-11F airplanes leased from (CEA), when required.
February 2005: 4 MD-11F's ((48461; 48496; 48498; 48520), China Eastern (CEA) wet-leased.
April 2005: 4-year agreement for use of Air Cargo Manager software from Champ Cargosystems, a Cargolux (CLX) subsidiary, in which (SITA) has taken a majority 51% participation.
May 2005: 2 orders (November 2005) 747-400F's (24998; 25075), ex-Air Canada (ACN), Guggenheim Aviation Partners (GUG) leased, after conversion to freighter by Bedek Israeli Aircraft Industries (IAI).
July 2005: $430 million, 2 orders (July 2006) 747-400F's.
August 2005: Goodrich Corp (BFG) was selected by China Air Cargo (CKK) to supply the main deck and lower lobe cargo handling systems for its two new 747-400ERFs. The (BFG) cargo system includes the mechanical system, power drive units, electrical control system and floor panels. The airplanes will be delivered to (CKK) in July 2006 and August 2007.
November 2005: 2 A300B4-203F, Kuzu Cargo (BRN) wet-leased.
March 2006: China Air Cargo (CKK) is adding 2 flights to its current schedule of 4x-weekly flights to the new cargo center at Dallas/Fort Worth International Airport (DFW). It began serving (DFW) 2 years ago.
September 2006: China Air Cargo (CKK) executives have been detained and are under investigation by Shanghai prosecutors for allegedly taking more than CNY10 million/$1.3 million in bribes. Chinese media reported that four officials of the China Eastern Airlines (CEA)/China Ocean Shipping Group joint venture are suspected of receiving illegal payoffs to allocate cargo space on airplanes for "low" prices. Neither the airline nor the government is commenting officially.
Boeing (TBC) delivered the first 747-400ERF to (CKK), the (CEA)/China Ocean Shipping Group joint venture. (CKK)'s fleet is composed of six MD-11Fs and one leased 747F freighter, and it uses belly space on (CEA) passenger flights. The airplane delivered to (CKK) will carry a maximum payload of 124 tons and has a maximum range of 4,970 nm.
(CKK), the China Eastern Airlines (CEA)/China Ocean Shipping Group joint venture, signed a 10-year, $28 million OnPoint Solutions agreement with (GE) covering overhaul and maintenance services on (CF6-80C2) engines, that will power the carrier's two 747-400Fs.
1st 747-40BERF (35207, B-2425, 9/06 - see photo), delivery.
October 2006: China Air Cargo (CKK) is China's 1st all-cargo airline operating dedicated freight services using China Eastern's (CEA) route structure.
(IATA) Code: CK - 112. (ICAO) Code: CKK (Callsign - CHINA KING).
Parent organization/shareholders: China Eastern Airlines (CEA) (70%); & China Ocean Shipping Company (COSCO) (30%).
Main Base: Shanghai Hongqiao International Airport (SHA).
Hub: Shanghai Pudong International airport (PVG).
Domestic, freight destinations: Beijing; & Shanghai.
International, freight destinations: Anchorage; Chicago; Dallas/Fort Worth; Los Angeles; Luxembourg; New York; Paris; San Francisco; & Seattle.
January 2007: China's 2 top cargo airlines, Air China Cargo (CAO) and China Air Cargo (CKK), are set to merge before year end in a bid to strengthen China's market share over foreign carriers, which currently control about 2 thirds of the country's air cargo volume. The 2 cargo airlines, which are affiliated with Air China (BEJ) and China Eastern Airlines (CEA), will merge into one company based in Shanghai, the country's economic hub, under the "China Cargo"'s name. The joint company will be a 50 - 50 venture between (BEJ) and (CEA).
Later, (BEJ) reportedly is planning to set up a Shanghai-based cargo joint venture with Cathay Pacific Airways (CAT). "We are now preparing for the joint venture program and hope to realize practical progress in the cargo business partnership with (CAT) in the first half of 2007," VP, Fan Cheng said. "How to significantly improve our cargo transport capabilities is an important task for (BEJ) in 2007," he added. He said long-running attempts to reach a similar agreement with (CEA) had failed.
April 2007: Air China (BEJ) unveiled details of the new cargo airline it plans to operate in partnership with Cathay Pacific Airways (CAT), to be based on the existing China Air Cargo (CKK) that flies out of Beijing. The new carrier, in which (BEJ) will hold a 51% stake, is scheduled to launch in June, and will hub in Shanghai. (BEJ) currently holds 51% of (CKK), while Citic Pacific and Beijing Capital Airport Group have stakes of 25% and 24% respectively. "We are discussing with Citic Pacific and Beijing Capital Airport Group on how to cede their shares in (CKK). They can either hold (BEJ)'s shares in exchange or sell their stakes in cash," (BEJ) Planning & Development Department Deputy Director, Hu Pengbin said.
There is widespread speculation that (CAT) will invest in cargo airplanes for its 49% stake in the new carrier, but that is just one option, (BEJ) noted. Last year, (CAT) introduced two 747-400BCFs and posted record cargo revenue of HK$11.98 billion/$1.53 billion. The cargo venture is said to be an important part of (BEJ)'s strategy to build Shanghai as a hub, which involves expanding international services and integrating a subsidiary from nearby Zhejiang Province into a new company employing approximately 1,000 people to control its business in the Yangtze Delta region, according to (BEJ) VP Yang Lihua. It intends to establish a cargo station at (PVG) capable of processing 1.2 millions tons each year.
September 2007: 747-40BFER (35208, B-2426), delivery.
March 2008: Air China (BEJ) intends to make Air China Cargo (CAO) its wholly owned subsidiary and is negotiating with Beijing Capital Airport to purchase the latter's 24% stake in the country's largest cargo carrier. "We did talk with Beijing Capital Airport about the purchase of their shares in the (CAO) carrier, but so far, no substantial progress has been made," (BEJ) Board Secretary, Huang Bin revealed. In December, (BEJ) announced plans to raise its stake in (CAO) to 76% from 51% through the purchase of Gold Leaf Enterprise Holdings' stake in (CAO) shareholder Langxing Company.
(CAO) has suffered operating losses in recent years and reported a net loss of -CNY382 million/-$53.4 million in the 1st 9 months of 2007. (BEJ) cited "an increase of freighters that resulted in low airplane utilization rates" and "management problems" as the causes. In response, the carrier has sought greater penetration in Shanghai. It floated the possibility of a cargo joint venture (CEA), when discussing its recent bid for its rival. "(CKK) is one of the most profitable subsidiaries of (CEA). If (BEJ) can cooperate with (CEA) in the cargo business, by reorganizing (CAO) with (CKK) successfully, it will pave the way for (BEJ) to merge with (CEA)," said an industry source who asked to remain unidentified.
(BEJ) and (CEA) discussed a cooperation between their respective cargo subsidiaries in 2006, but a potential 50/50 joint venture was scuttled by a bribery case involving (CEA). (BEJ) also is discussing the launch of a Shanghai-based cargo airline with (CAT).
November 2008: Nine mainland Chinese carriers were selected to operate weekday flights across the Taiwan Strait and are expected to launch service on December 15, according to the (CAAC) (CAC). In addition to Air China (BEJ), China Eastern Airlines (CEA), China Southern Airlines (GUN), Hainan Airlines (HNA), Xiamen Airlines (XIA), and Shanghai Airlines (SHA), which all already operate weekend cross-strait flights, Sichuan Airlines (SIC), Shandong Airlines (SHG) and Shenzhen Airlines (SHZ) were tapped to operate the weekday flights.
Mainland carriers are permitted to operate 54 weekday flights per week. According to the (CAC), (BEJ) will operate 10 while 12 have been allotted to (CEA), 10 to (GUN), five to (HNA), six to Xiamen (XIA), and five to (SHA). Sichuan (SIC), Shandong (SHG), and Shenzhen (SHZ) each have been granted permission to operate two weekly weekday flights.
Regarding cross-strait cargo flights, (CEA) subsidiary, China Air Cargo (CKK), China Southern Airlines (GUN), and Air China Cargo (CAO) have been selected. (CKK) and (GUN) each are expected to operate 10 monthly flights from Shanghai and Guangzhou respectively, while (CAO) is expected to operate five monthly flights from both Shanghai and Guangzhou.
Rockwell Collins won a deal with (CKK) to provide communication, navigation, and surveillance avionics for 10 777Fs. The airplanes are slated for delivery from December 2009 through 2013.
SEE ATTACHED - - "CKK-2007-TOP-WLD-CARGO."
July 2009: China Eastern Airlines (CEA) will benefit the most from the agreement reached in April to expand significantly the number of flights permitted across the Taiwan Strait, according to a cross-strait distribution plan released by the (CAAC) (CAC). The Taipei-based Strait Exchange Foundation and the Beijing-based Association for Relations Across the Taiwan Strait, signed the accord that increases from 108 to 270 the number of direct flights allowed beginning this month. Under the (CAC)'s plan, (CEA) is designated to operate 58 weekly flights to Taipei from Shanghai, Nanjing, Wuhan, Qingdao, Kunming, Xi'an, Hefei, Ningbo, and Nanchang. (CEA) Board Secretary, Luo Zhuping noted that the carrier's cross-strait routes are among its most profitable and have operated at 80% to 90% (ASK) capacity on average.
Air China (BEJ) was assigned 54x-weekly flights to Taipei from Beijing, Shanghai, Chengdu, Chongqing, Hangzhou, Tianjin, and Guiyang. China Southern Airlines (GUN) also was allocated 54x-weekly flights to Taipei to be operated from Shanghai, Guangzhou, Xiamen, Dalian, Guilin, Shenzhen, Wuhan, Changsha, Haikou, Shenyang, Zhengzhou, Harbin, and Guiyang.
Hainan Airlines (HNA) and Shanghai Airlines (SHA) each were allocated 20 weekly flights, while Xiamen Airlines (XIA) was given 22. Sichuan Airlines (SIC), Shandong Airlines (SHG) and Shenzhen Airlines (SHZ) were granted 14 weekly flights each.
On the cargo front, Air China Cargo (CAO) was assigned 10x-weekly flights to Taipei from Shanghai and Guangzhou, while (CEA) subsidiary China Cargo Airlines (CKK) was assigned 8x-weekly flights from Shanghai to Taipei and China Southern (GUN) was assigned 10x-weekly flights from Guangzhou to Taipei.
November 2009: China's cargo industry appears to be moving toward consolidation as airfreight players look to mitigate damage from continuing losses that have resulted from the global economic downturn. According to an industry insider, Chinese logistics giant Sinotrans has signed a cooperative agreement with China Eastern Airlines (CEA) and "is considering selling some or all of its stake" in Grandstar Cargo International Airlines (GSC), the joint venture carrier it launched with Korean Air (KAL) last year. Sinotrans owns 51% of (GSC) while (KAL) controls 25%. A further 13% is owned by Hana Capital Company and 11% by Shinhan Capital Company. The industry source said that the Sinotrans stake would be sold to either (CEA) or Air China (BEJ), with which the logistics company signed a similar cooperative agreement earlier this year. A final decision on the stake sale has not been made, the insider said.
Grandstar (GSC) has been unable to turn a profit in its first 17 months of operation. Sinotrans cited a -CNY61.8 million/-$9 million 3rd-quarter deficit on its investment in a recent report to investors. (GSC) has not expanded beyond its initial Tianjin - Frankfurt route.
Additional air cargo consolidation in China could result from Air China (BEJ)'s negotiations with Cathay Pacific Airways (CAT) to launch a cargo (JV) in Shanghai by next spring. Also, (CEA) subsidiary, China Air Cargo (CKK)'s merger with Shanghai Cargo Airlines likely will result from the pending (CEA) acquisition of Shanghai Airlines (SHA).
China has nine cargo carriers that operated a total freighter fleet of 70 airplanes as of December 31, 2008. But hit hard by the global financial crisis, those carriers are suffering from serious financial difficulties, especially on international routes. The (CAAC) (CAC) last month implemented a series of measures designed to lift the nation's airfreight carriers out of the red, including increasing shipping rates, providing subsidies and encouraging mergers and consolidation.
December 2009: China Air Cargo (CKK) selected Boeing (TBC)'s Class 3 Electronic Flight Bag (EFB) for 6 new 777F freighters, as well as multiple airplane health management modules for both the 777s and its 2 current 747-400Fs. The China Eastern Airlines (CEA) and China Ocean Shipping joint venture will take delivery of its 1st 777 in the 2010 1st quarter.
February 2010: 777F6N (37711, B-2076), (GECAS) (GEF) leased.
March 2010: China Eastern Airlines (CEA) has taken a 51% stake in Great Wall Airlines (GWZ). The stake, formerly held by China Aerospace Science and Technology Corporation (CASTC), reportedly was transferred at the behest of the state-owned Assets Supervision & Administration Commission, which is the controlling shareholder of both (CEA) and (CASTC). (CEA) said it will integrate Great Wall (GWZ) with its China Air Cargo (CKK) subsidiary, as well as with Shanghai Airlines Cargo. (GWZ) was established in 2005 with CNY1.2 billion/$175.5 million from (CASTC) subsidiary Beijing Aerospace Satellite Applications Corporation, Singapore Airlines Cargo and Temasek Holdings subsidiary Dahlia Investments. It operates three 747-400Fs out of Shanghai Pudong (PVG).
777-F6N (37713, B-2077), (GECAS) (GEF) leased.
July 2010: China Eastern Airlines (CEA) is moving forward with the integration of its China Air Cargo (CKK) subsidiary and the cargo subsidiary of merger partner Shanghai Airlines (SHA), Shanghai Airlines Cargo International, according to (CEA) General Manager Ma Xulun. (CEA) acquired (SHA) last year. Ma said the companies are in discussions on how to apportion the original shareholders' respective shareholdings in the combined cargo company. He revealed that the investors, including China Ocean Shipping Company and (EVA) Air, are reluctant to sell their stakes. (CEA) Chairman, Liu Shaoyong said previously that (CEA) expects to introduce a strategic investor for its cargo subsidiary this year, with implications for the holdings of China Ocean and (EVA).
But Ma rejected widespread speculation that the cargo operations of China's big 3 carriers will be merged into a single freight airline. "Currently we are still busy with our internal cargo merger," he said. He pointed out that (CEA) has completed its integration with (SHA) in the areas of marketing, Maintenance Repair & Overhaul (MRO), ground service and Information Technology (IT). The merger is expected to save -CNY680 million/-$99.9 million annually. Owing to the synergy effect, and strong domestic market rebound, (CEA) is expected to report a bigger profit for the 1st half of this year than in the year-ago period, when it earned +CNY1.173 billion.
777-F6N (37715, B-2079), (GEF) leased.
September 2010: China Eastern Airlines (CEA) said its new subsidiary cargo carrier, comprised of the assets of China Air Cargo (CKK), Great Wall Airlines (GWZ) and Shanghai Airlines Cargo, will commence operations on January 1, 2011 from its base in Shanghai.
(CEA) General Manager Ma Xulun noted that (CEA) will be the controlling stakeholder in the new entity. (CEA) acquired Shanghai Airlines (SHA) last year and signaled it would combine the 2 carriers' cargo subsidiaries. Earlier this year it took a 51% stake in Great Wall (GWZ), which operates 3 747-400Fs, based at Shanghai Pudong.
Ma said other shareholders in China Air Cargo (CKK), Great Wall (GWZ) and Shanghai Airlines Cargo (SHA) will also hold minority stakes in the new cargo carrier, though he didn't reveal the share proportion breakdown.
Great Wall (GWZ)'s stakeholders include Singapore Airlines (SIA), while China Ocean Shipping Group and Taipei-based Eva Airways (EVA) hold stakes in China Air Cargo (CKK) and Shanghai Airlines Cargo (SHA), respectively.
Shanghai is China's largest domestic air cargo market, but it is dominated by FedEx (FED), (UPS) and (DHL), rather than domestic operators. In addition to the new (CEA) carrier, Air China (BEJ) is expected to launch a joint venture (JV) cargo airline based in Shanghai in conjunction with Cathay Pacific Airways (CAT); the (JV) must still gain regulatory approval.
Separately, (CEA) signed a strategic cooperation framework agreement with Shanghai Airport Group, which controls both Hongqiao and Pudong. The parties said they intend to build Shanghai as an international aviation hub. Under terms of the agreement, (CEA) will allocate more capacity to Pudong to open more international routes and boost flight frequencies on existing international and domestic trunk routes.
(CEA) Chairman Liu Shaoyong has said that (CEA) will embark on an ambitious international expansion plan starting next year. It hopes to change the ratio of international to domestic routes in its system from 3:7 currently to 4:6 by 2015.
December 2010: China Eastern Airlines (CEA) revealed its plan to consolidate its cargo subsidiaries as its merger process with Shanghai Airlines (SHA) accelerates. (CEA)’s 3 cargo subsidiaries: — China Air Cargo (CKK), Shanghai Airlines Cargo (SHA) and Great Wall Airlines (GWZ) — will be consolidated into 1 cargo venture. (CEA), with a 51% share, will be the controlling stakeholder. The other stakeholders include China Ocean Shipping (Group) Company, Eva Air (EVA) and Singapore Airlines Cargo (SQM).
(EVA) noted it would invest CNY328 million/$49.1 million to purchase a 16% stake in the new cargo venture. An industry insider said that China Ocean Shipping (Group) Company may hold a 17% stake and (SIA) Cargo (SQM) would hold the remaining 16%.
June 2011: China Southern Airlines (GUN) said in a widely cited filing with the Hong Kong Stock Exchange that it reached an agreement with Boeing (TBC) to purchase 6 777F freighters valued at $1.58 billion based on list prices, although it noted that it received "price concessions" making the cost "significantly lower" than list prices. Meanwhile, China Eastern Airlines (CEA) officially relaunched China Air Cargo (CKK), finalizing the integration of its cargo unit with Shanghai Airlines (SHA)'s airfreight subsidiary.
(GUN) said the 6 777Fs will be delivered between 2013 and 2015 and "will facilitate the optimization of the structure of the group's cargo business, freighter fleet and cargo traffic capacity."
The 777Fs will enable (GUN) to boost its cargo capacity +8.4%. Rival (CEA) is also seeking to buttress its cargo business through the relaunch of China Air Cargo (CKK), which is based on the assets of (CEA)'s old subsidiary, (CKK), Shanghai Airlines (SHA) Cargo International and Great Wall Airlines (GWA). The new (CKK) has a registered capital of CNY3 billion/$463 million. (CEA) holds 51%, China Ocean Shipping Company owns 17%, Eva Airways (EVA) controls 16% and Singapore Cargo Airlines (SQC) has 16%.
(CKK) is based in Shanghai and will operate 18 freighters comprising 5 747-400Fs, 4 777Fs, 4 MD-11Fs, 2 757-200Fs and 3 A300-600Fs. (CKK) is scheduled to introduce 2 new 777Fs this year. (CEA) Managing Director Ma Xulun said the 747-400F and 777F would become the cargo venture's main fleet types by 2015.
Shanghai is the biggest and most lucrative cargo market in China, but it is dominated by FedEx (FED), (UPS) and DHL, rather than domestic operators. In addition to the new (CEA) carrier, Air China (BEJ) and Cathay Pacific Airways (CAT) formally launched their Shanghai-based joint venture (JV) cargo operation in May. It is noteworthy that (GUN) has also shifted its cargo base to Shanghai.
April 2012: Freight traffic in the region did not fare well, recording a decrease of -1.5% compared to 2010. “Hong Kong airport (HKG) continued to be the busiest cargo airport in the world, closely followed by Memphis airport (MEM) and Shanghai Pudong airport (PVG). The other 3 busiest airports in the region with the highest freight traffic are Seoul Incheon airport (ICN), Dubai airport (DXB) and Tokyo Narita airport (NRT).”
June 2012: China Eastern Airlines (CEA)'s subsidiary, China Air Cargo (CKK) is expected to become the 2nd Chinese carrier to join the SkyTeam (SKT) Cargo alliance as it aims to improve its global competitiveness. (CKK) General Manager, Zhu Yimin said (CKK) would formally join the (SKT) alliance by June 2013.
(CEA) and subsidiary, Shanghai Airlines (SHA) joined the SkyTeam (STM) alliance last year; China Southern Airlines (GUN) became a member in 2007.
(CKK), China’s largest cargo carrier, operates a fleet of 19 airplanes on 16 domestic and international routes. (CKK) is moving forward with its strategic transition plan to become a logistics enterprise “instead of being just a cargo carrier. It is conducive for us to build an international route network and improve our global competitiveness to join the (STM) Alliance,” Zhu said.
SkyTeam (STM) Alliance Cargo has 9 member carriers that include Aeroflot (ARO), AeroMexico (AMX), Air France (AFA)-(KLM) Cargo, Alitalia (ALI) Cargo, (CSA) Czech Airlines, Delta (DAL) Cargo and Korean Air (KAL) Cargo.
China Air Cargo (CKK) is controlled by China Eastern Airlines (CEA) which owns 51% of (CKK) with China Ocean Shipping, Singapore Airlines Cargo (SQC) and (EVA) Air holding the remaining shares.
September 2012: Pratt & Whitney (PRW) signed a contract for its engine management program (EMP) service; a 3-year (EMP) agreement with China Air Cargo (CKK) covering 4 (PW2000) engines.
January 2013: China Eastern Airlines (CEA) plans to sell its 51% stake in subsidiary China Air Cargo (CKK) to subsidiary, the Shanghai Eastern Logistics Company. The CNY951 million/$150.7 million deal is another step toward consolidating its cargo business.
Shanghai-based, China Air Cargo (CKK) operates a fleet of 19 airplanes, comprising 6 777Fs, 5 747Fs, 3 MD-11Fs, 2 757Fs and 3 A300F on 16 international routes.
(CKK) reported a net loss of -CNY637 million as of November 30, due to the continuous global cargo market decline. However, China Eastern (CEA) Board Secretary, Wang Jian said the deal has nothing to do with the loss. “The real reason is we want to consolidate our cargo business is to make the Shanghai Eastern Logistics Company as our main logistics platform to further explore logistics market,” he said.
(CEA) last month purchased a 29.7% stake in the Shanghai Eastern Logistics Company from the China Ocean Shipping Group. “We want to achieve a business model transformation to become a real modern logistics service provider by consolidating our air cargo business with our logistics business,” (CEA) General Manager Ma Xulun said.
June 2013: China Eastern Airlines (CEA)’s subsidiary, China Air Cargo (CKK) officially joined the SkyTeam (STM) Cargo alliance as it aims to expand its international route network. (CKK) signed a letter of intent (LOI) in June 2012.
“With liberalization of global aviation industry and growing trend of alliance development, it conforms to long-term strategic interest of China Air Cargo (CKK) to join SkyTeam (STM) Cargo, which can help (CKK) not only to benefit from scale economy but also be able to improve global competitiveness,” China Eastern (CEA) Senior VP Shan Chuanbo said. (CKK) is moving forward with its strategic transition plan to become a logistics enterprise in addition to a cargo carrier.
(CKK) operates a fleet of 10 airplanes, comprising 6 MD-11Fs, 2 747-400Fs and 2 A330-600Fs. It plans to gradually introduce 777F freighters to replace the MD-11F freighters. By 2015, (CKK) expects to use mainly 777Fs, 747-400Fs and A300-600Fs.
SkyTeam (STM) Cargo has 9 member carriers, comprising Aeroflot (ARO), AirFrance (AFA) - (KLM) Cargo, Alitalia (ALI) Cargo, Delta (DAL) Cargo, Aeromexico (AMX) Cargo, China Airlines (CHI) Cargo, Czech Airlines (CSA) Cargo, China Southern (GUN) Cargo and Korean Air (KAL) Cargo.
May 2016: News Item A-1: "China Eastern Launches Ningbo - Amsterdam Cargo Service" by Lena Ge, "China Aviation Daily" May 13, 2016.
China Eastern Airlines (CEA) has launched a cargo service between Ningbo and Amsterdam, marking the 1st inter-continental all-cargo route at Ningbo Lishe International Airport.
The inaugural flight took off from Ningbo at 1:00 pm on May 5. The 2x-weekly service is available every Tuesday and Thursday, operated by Boeing 777-200Fs by (CEA)'s cargo unit, China Air Cargo (CKK).
This is Ningbo Airport's 1st intercontinental freighter service, and its 5th international cargo route.
August 2016: China Air Cargo (CKK) 757-25CF (27513, B-2848), delivery.
December 2016: "China Eastern Plans to Dispose of Freight Subsidiary"
by Lena Ge, "China Aviation Daily" December 01, 2016.
On November 29, China Eastern Airlines (CEA) entered into a Disposal Agreement to sell its 100% stake in Eastern Logistics. The transaction with Eastern Airlines Industry Investment Company, a wholly-owned subsidiary of China Eastern Air Holding, amounts to 2.43 billion yuan, (CEA) disclosed in a stock exchange statement.
Eastern Logistics, which deals with fright logistics business, wholly-owns Shanghai Eastern Transport and Eastern Express, while also holding an 83% stake in China Cargo Airlines (CKK).
Upon completion of the Disposal, each member of the Eastern Logistics Group will become a subsidiary of (CEA) Holding, which is the controlling shareholder of China Eastern (CEA).
(CEA) said Eastern Logistics had endeavored to change its business model in recent years but its share of the freight market has been shrinking, and its prospects unclear due to the relatively low competitiveness and risk resistance. Subsidiary China Cargo (CKK) also suffered "large losses" from 2011 to 2015.
Therefore, the disposal is "a specific measure and reasonable option" for (CEA) to cope with "poor conditions of the air freight market" and is beneficial in improving the overall operational performance and focusing relevant resources on operating its air passenger transportation business in future.
For the 6 months ended June 30, Eastern Logistics and its subsidiaries posted an operating profit of +2.61 billion yuan, and a net profit of +272 million yuan (after taxation).
China Eastern (CEA) added proceeds from the disposal will be used as general working capital for the group. The Disposal will however have to be approved by shareholders in a meeting on January 17, 2017.
February 2017: 757-25CF (27517, B-2849) registered.