China Eastern Airlines (MU, Shanghai Hongqiao) and its controlling shareholder, CEA Group, will pump CNY1.5 billion yuan (USD217.4 million) into their airline catering arm to improve that entity's financial security help it manage the impact of Covid-19
In a December 30, 2022, filing with the Hong Kong Stock Exchange, China Eastern said it would contribute CNY675 million (USD97.8 million) to Eastern Air Catering Investment Co., Ltd, and the CEA Group would contribute a further CNY825 million (USD119.6 million). China Eastern Airlines presently has a 45% stake in the catering business and the CEA Group has a 55% stake. After the capital increase, the proportion of those stakes will remain unchanged however the registered capital of Eastern Catering will increase to CNY2.16 billion (USD313.1 million).
The filing said the capital, to be paid in cash within 21 days of the capital increase agreement taking effect, will "optimise assets structure, lower gearing ratio, improve corporate credit, as well as enhancing financial security and anti-risk capabilities."
Eastern Air Catering and its subsidiaries supply catering and related services to various airlines from its airport kitchens located around China. In its 2022 interim financial report, China Eastern Airlines said it spent CNY439 million (USD63.6 million) on catering in the first six months of the year. Analysis by Modor Intelligence of the Chinese inflight catering market for the decade 2018-2028 suggests Eastern Air Catering is a significant local competitor but sits outside the top five airline catering firms with operations in mainland China, but the analysis also notes all the catering companies are trying to grow their market share by extending existing contracts or acquiring new contracts.
