China Eastern Airlines posted a 2018 net profit of CNY2.71 billion ($394 million), down 57.4% compared to CNY6.35 billion achieved in 2017.

Total revenue for the year was CNY114 billion, up 13% year-over-year (YOY). Operating expenses for the year were CNY102.4 billion up 13.43% YOY, compared to CNY90.3 billion in 2017.

China Eastern’s passenger traffic (RPKs) rose 10% YOY; domestic and international RPKs were up 10.2% and 9.6%, respectively. Capacity (ASKs) grew at a slower pace of 8.3% YOY; international capacity grew 6.9% YOY. As a result, total load factor was up 1.23 points to 82.3%.

International and domestic yield grew in parallel, at 4% YOY each. 

China Eastern’s cargo sector continued to inject 16.3% more capacity (AFTKs), but cargo revenue (RFTKs) grew by only 5.3% YOY, saved by its international network, which was up 9.2%. Domestic and regional cargo revenue dropped 1% and 4.8%, respectively. 

The airline said the promising aviation growth in China is overshadowed by trade protectionism and a global economic slowdown. Despite the averaging jet fuel prices, growth is undermined by the depreciation of the Chinese yuan against the dollar.

The Shanghai-based carrier spent CNY33.7 billion on fuel, up 32.9% YOY. While China Eastern is not involved in fuel hedging, the carrier monitors price fluctuations and would consider starting to hedge fuel upon board approval. 

The carrier’s LCC subsidiary, China United Airlines, saw 9% YOY net profit growth to CNY8.8 billion for 2018. The airline added that investing in mobile technology and direct marketing resulted in a 17% growth in direct revenue, and ancillary revenue was up 58% YOY. 

In 2019, China Eastern will induct five Airbus A350s, 25 A320s, six Boeing 787s and 24 737s, In the following year, it will bring in four A340s, 30 A320s, three 787s and 24 737s, and retire 10 737s.

Chen Chuanren,