BEIJING, July 29 Military drills have become a
new headache for China Eastern Airlines Corp and
other Chinese carriers, causing hundreds of flight delays and
cancellations just as they are grappling with a sharp decline in
In one of the most serious air disruptions yet, authorities
issued a red alert on Tuesday, resulting in a near shut down of
20 airports in east China between 2-6 p.m. (0500-1000 GMT). Air
traffic capacity could fall by as much as three quarters at
Shanghai's two main airports for the day, they warned.
The military exercises, which political analysts say are
larger in scope and duration than in years past, come amid an
increase in tensions with Japan and other Asian nations,
although the government has called them annual and routine. The
delays could affect flights until mid-August, Beijing's Public
Security Bureau said last week.
The drills have the potential to cost airlines millions of
dollars, some analysts and industry officials said. But others
said the impact may not be that bad as non-cancelled flights
would carry more passengers and airlines would not have to offer
deep discounts on flights that would normally be less popular.
"China Eastern is affected the most because it based in
Shanghai and has more flights to and from nearby cities," said
Gao Liangyu, an analyst at Huatai Securities.
A spokesman for China Eastern said the impact was unclear.
The carrier has warned passengers about more flight disruptions
ahead especially to and from cities such as Nanjing, Wuhan,
Zhengzhou and Qingdao.
Shares in the airlines have so far showed little reaction to
the drills. China Eastern's Shanghai-traded shares have gained 2
percent so far this week, roughly in line with the benchmark
index. Air China has gained 3.5 percent and China
Southern is up 2.9 percent.
Hit by a sharply weaker yuan that has pushed up costs, China
Eastern warned it would make only around 50 million yuan ($8
million) in net profit in the first half, down 93 percent from
the same period a year earlier.
Other airlines affected by the drills include China Southern
Airlines Co Ltd and Air China Ltd
which both operate a large amount of
flights out of Shanghai.
Air China has also warned of a large decline in net profit
for the first half while China Southern has said it will make a
($1 = 6.1808 Chinese Yuan)
(Reporting by Fang Yan and Matthew Miller; Editing by Edwina