CHINA : Grandstar Cargo to get capital injection
Sinotrans Air Transportation Development, the air freight forwarding arm of China’s majority state-owned shipping and logistics giant, Sinotrans said it would give up the rights of first refusal on a 24 per cent stake in Grandstar Cargo and will jointly inject US$30 million into the latter with other shareholders.
February 1, 2012
CHINA : Grandstar Cargo to get capital injection
Sinotrans Air Transportation Development, the air freight forwarding arm of China’s majority state-owned shipping and logistics giant, Sinotrans said it would give up the rights of first refusal on a 24 per cent stake in Grandstar Cargo and will jointly inject US$30 million into the latter with other shareholders. The 24 per cent stake in Grandstar Cargo will be sold by Asiana Investment and Shinhan Investment to Asiana Investment Securities, according to a stock exchange filing. Grandstar Cargo, based in Tianjin, China operates scheduled and nonscheduled international cargo flights to Europe, the US and Asia was jointly established in 2007 by Sinotrans, Korean Air, Asiana Investment, and Shinhan Investment, with shareholdings of 51, 25, 13, and 11 per cent, respectively. After the completion of the shareholding transfer, Sinotrans, Korean Air, and Asiana Investment Securities will jointly inject $30 million into Grandstar Cargo to boost its registered capital to $95 million. Sinotrans will contribute $15.3 million of the total. China revises cargo forecast downwards The General Administration of Civil Aviation of China (CAAC) has cut its official air traffic forecast for 2011 as international passenger and cargo volumes weaken along side the deteriorating global economic conditions. China’s air cargo growth forecast has been dramatically slashed from a growth of 11.5 per cent to flat in 2011, a repeat of 2008 when world economies hit bottom. China’s carriers are now expected to handle 5.6 million tonnes of air freight, compared with 6.4 million tonnes forecast previously. Passenger growth forecasts have been cut from 13 to 8 per cent this year to 288 million passengers – nearly 13.4 million fewer passenger than previously estimated – but up none-the-less from 267 million last year. The China Statistics Bureau data for 3Q2011, released in mid-October, revealed that China’s GDP increased by 9.1 per cent in the quarter, marking the slowest pace of growth since 2009, adding to concerns of the worsening global economic conditions as Europe’s debt crisis deepens. In the first nine months of 2011, China’s total air cargo declined one per cent to 4.1 million tonnes while the third quarter saw cargo volumes fall 0.7 per cent to 1.4 million tonnes, led by a 5.8 per cent drop in international cargo volumes which surpassed domestic growth of two per cent. And in a sign of what may be in store for the remainder of the year, September volumes were down 3.5 per cent on the same month last year to 506,000 tonnes on weak export volumes. International cargo volumes were down 8.9 per cent to 151,500 tonnes while exports to Hong Kong, Macau and Taiwan slid over 12 per cent to 16,400 tonnes. Domestic volumes were also down slightly by one per cent to 355,000 tonnes. Chinese carriers, meanwhile, reported a 38.8 per cent slump in profits in the month of September to CNY3.7 billion (US$582 million) which CAAC attributed to the economic downturn in the US and Europe and the decline in international cargo demand. It also noted that the growth in domestic traffic, especially in the rapidly developing central and western regions of China, helped to maintain profitability. Revenue growth of 17.7 per cent to CNY31.83 billion was outpaced by a 28.1 per cent increase in operating expenses to CNY27.7 billion. For the first nine months Chinese carriers reported profits of CNY29.4 billion, up 6.2 per cent year-on-year, due to a strong start of the year. China Eastern cancels order for 24 Dreamliners China Eastern Airlines has become the first Chinese airline to cancel B787 orders, opting instead for A330s and smaller B737s. China Eastern Airlines executive director Luo Zhuping said in late-October that the global economic slowdown had made it more difficult for Chinese carriers to operate long-haul international routes. With the B737/B787 announcement China Eastern also disclosed it was ordering 12 A330-200s and three A330- 300s for delivery between 2013 and 2015. By dropping its order of 24 B787s (15 for China Eastern and nine for Shanghai Airlines, a subsidiary of China Eastern) for 45 B737NGs China Eastern retains the value of its order, with concessions. “The [B737] aircraft will primarily be used to satisfy the increasing demand of the domestic passenger air transportation as well as the international and regional medium-and-short-haul routes passenger air transportation in the coming years, and to increase the company’s competitiveness in the domestic, international and regional passenger air transportation market in the medium-and-short haul routes,” China Eastern said in a statement. The carrier expects the 45 B737NGs to increase capacity by 8.65 per cent from 31 December 2010 levels. They will be delivered between 2014 and 2016. The deal with Airbus also includes the airframer taking all five of China Eastern’s A340-300s, relatively old aircraft that are falling out of favour with the market, largely due to fuel efficiency issues. Boeing remains confident in the future of the B787 saying in a statement that there was no signs of further cancellations, adding the other Chinese airlines “remain committed to the 787.” “The 787 is the right choice for these airlines’ international expansion for a number of reasons, including fuel efficiency and environmental performance.” Among Chinese airlines, China Southern has 10 Dreamliners on order, Air China 15, Hainan Airlines 10 and Xiamen Air six. In March, Hong Kong Airlines signed an preliminary order for 32. The Dreamliner is about three years behind its original schedule because of delays in the shipper’s extended global supply chain. Overall, Boeing has more than 800 orders for the lightweight, carbon-composite aircraft on its books.