China Eastern 2008 traffic drops as economy slows

SHANGHAI, Jan 9 (Reuters) - China Eastern Airlines (0670.HK) (600115.SS), one of the country's three biggest carriers, said passenger volume fell 5.4 percent last year, the first drop in at least nine years as the economic slowdown curbed air travel.

China Eastern carried 37.05 million passengers last year, data provided on the company's website showed, halting four years of double-digit growth fuelled by a booming economy.

Cargo volume fell 5.6 percent to 887,000 tonnes during the period, it said.

China Eastern's Hong Kong-listed shares fell 4.2 percent to HK$1.13 in morning trade, lagging a 1.2 percent rise in the benchmark Hang Seng Index .HSI.

China's air traffic began to slide in May as a series of natural disasters and a slowing economy dented demand for air travel.

The country's top airlines, which also include Air China (0753.HK) (601111.SS) and China Southern Airlines (1055.HK) (600029.SS), posted net losses in their third quarter results.

China's airlines lost 7.07 billion yuan ($1.04 billion) in the first 11 months of 2008, the official Shanghai Securities News said on Friday, citing data from the Civil Aviation Administration of China (CAAC).

Beijing has unveiled a raft of support measures to help the ailing industry, including combined cash injections of 10 billion yuan into China Eastern and China Southern.

The State Council, or cabinet, has also approved a three-year exemption from the operations tax on airlines' fuel surcharges, retroactive to Jan. 1, 2008. [ID:nSHA74003]