China Eastern Airlines is expected to receive a further CNY2 billion ($294 million) capital injection from the Chinese government to help the struggling carrier survive.

The Shanghai-based carrier was allocated CNY7 billion from Beijing at the end of 2008, which was approved by minority shareholders in February and is awaiting approval from the China Securities Regulatory Commission.

"Our biggest problem is insolvency. We would have gone bankrupt if we hadn't received [the] capital injection," CEA Board Secretary Luo Zhuping noted. GM Ma Xulun also admitted that the carrier can't solve its financial problems by itself. CEA had a debt burden of CNY83.7 billion as of March 31 and its debt ratio reached 115.13% in the same timeframe, according to its financial report for the first quarter.

Industry analysts pointed out that the bailout money is meant to pave the way for a merger with Shanghai Airlines, which is reported to have been discussed at the government level, but no specific plan has been made. SAL Chairman Zhou Chi has stressed that the merger won't happen in the near future (see item below).

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