China Eastern Airlines won shareholders' approval on Thursday for a share placement plan that will bring it a capital injection of CNY7 billion yuan (USD$1.02 billion) from the government.
The airline, one of China's three major carriers, will use the funds to improve its balance sheet and strengthen its ability to continue operations, it said.
After years of robust growth on the back of a soaring domestic economy, China's airlines face falling passenger demand, intensifying competition and heavy cost pressures as the world's third-largest economy slows with the global recession.
China Eastern and its peers Air China and China Southern Airlines all predicted losses for 2008, and will disclose detailed figures in their annual financial reports, scheduled for release before April 30.
China Southern Airlines' shareholders also on Thursday approved a share placement that will bring it an injection of CNY3 billion in government funds.
Both China Eastern and China Southern will issue shares to their state-owned parent companies, which have already secured funds from the government.
Recently appointed China Eastern Chairman Liu Shaoyong has set a target to cut his company's losses significantly in 2009, with the hope of breaking even in 2010.
He told reporters after the shareholders' meeting that the airline was holding talks with Airbus and Boeing about its previously announced plan to cancel or delay about half the 29 planes it had expected to receive this year.
The carrier has also agreed to sell a 35 percent stake in Joy Air, a regional airline in which it holds 40 percent, to Aviation Industry Corporation of China, a state-owned aircraft maker, he added.
Joy Air, which has yet to start operations, is capitalized at CNY1 billion.
China Eastern has also cut management salaries by up to 30 percent, effective from February 1, and is encouraging staff to extend their annual leave to one month from between 3 days and 15 days, said Liu Jiangbo, vice president of China Eastern's state-owned parent.
The extended leave alone would save the carrier CNY90 million this year, she said.
China Eastern will issue 1.44 billion new Shanghai-listed A shares at 3.87 yuan each to its state-owned parent, as well as 1.44 billion Hong Kong-listed H shares at 1.00 yuan each.
