Important Areas
Safety
China Eastern had an increased
focus on Safety highlighted by the establishment of the Nantong airport
training base to reinforce training on flying skills and the introduction of
the “Assessment and Remuneration Packages
of Star-rating Flight Crew Members.”
Service Quality
There has been a focus on
optimising its fleet structure and have placed an order for the acquisition of
70 new aircraft to increase the quality of service through the upgrading of
their VIP lounges, waiting areas and check-in areas in key areas. They also
upgraded their website and mobile application to increase customer service
quality and introduced nine overseas websites including an Australian website (http://au.ceair.com/muovc/main/en_AU/index.html).
Route Optimisation
The company has put a large emphasis
on optimising its routes by analysing flight capacities and reducing the
flights where there is no longer adequate demand. The company has also
highlighted its plans to increase flights to the USA in order to tap into the
American market. In 2012 it also entered into a codeshare agreement with
a number of airlines including Jetstar in Australia.
Fuel Consumption
A focus on route optimisation and precise fuelling according to routes were implemented to reduce fuel costs, arguably the largest cost to the business and a critical area to the company.
Future Strategies
China Eastern, with the premise of maintaining safe
operations, intends to achieve its goal of strengthening its management of
passenger and freight carriers and strictly controlling cost to achieve improved
operational efficiency.
Passenger Traffic business
- Allocate flight capacity and routes precisely and properly and to maintain accurate control of cabin space and refine pricing management.
- Increase direct sales by expanding sales and marketing platforms.
- Further enhance its cooperation with both members and non-members of SkyTeam Alliance.
Freight Logistics
- Restructure the route network based on demand.
- Reduce operating costs by controlling flight capacity.
- Enhance its ability to provide logistics solutions.
Other..
- Implement comprehensive budget management measures and strengthen the overall control in implementing this budget.
- Improve electronic business platforms and mobile service platforms.
Key Challenges & Some Company
Suggested Remedies
Interest rate fluctuations
Fluctuations in the US dollar and Renminbi interest
rates have significantly affected the Group’s finance costs. China Eastern has
highlighted the need to investigate different financial channels to reduce
their financial costs.
Exchange rate fluctuations
The fluctuation in the Renminbi exchange rate is
affected by domestic and international economic and political conditions and
general currency supply and demand dynamics.
Risk associated with the
fluctuation of fuel prices
The company has effectively reduced
fuel costs by approximately RMB130 million in 2012 by way of precise refueling
based on its flight plans as well as optimising routes. This is only a
temporary remedy though, at a certain point it will not be possible to reduce
the costs associated with fuel in this way.
Pledges
on assets and contingent liabilities
The value of the Group’s assets used to secure certain
bank loans was RMB22,544 million, representing an increase of 23.08% from
RMB18,317 million as at 31 December 2011.
Decrease in demand for freight
Reducing the flight capacity for
freight transportation.
Political and economic developments
Remedies depend on the situation.
To deal with the political developments between China and Japan China Eastern
have reduced the flight capacity to Japan.
