China to Back Budget Airlines
China will in 1H 2013 start working on policies to support the growth of budget airlines, Yicai.com reported, citing the Civil Aviation Administration of China. The aviation regulator visited Spring Airlines twice in 1H 2013 to learn the current state of China's only low-cost carrier and of China's low-cost aviation service market. Li Jiaxiang, the head of the aviation regulator, called on the major airlines to reduce operating costs which ate into their profits in 1H 2013. Separately, China's air passenger traffic rose 14.9% year on year in June, where international passenger traffic was up 17% and domestic passenger traffic up 14.4%, the aviation regulator said.
Debt Ratio Runs High for Industries Suffering Over Capacity
The central bank ordered suspension of loans to industries plagued with excess capacity as they reported debt-to-asset ratios around 60%, the Securities Times reported. The steel, cement, chemical fiber and aluminum industries, the four industries most apparently suffering over capacity, reported debt-to-asset ratios of 64.6%, 59.4%, 62% and 67.7% respectively as of the end of Q1 2013, and 80%, 42.1%, 44.4% and 50% of the industries' all companies reported debt-to-asset ratio of 60% or above, according to Wind data. If implemented, the central bank's order will further strain these industries' capital chain.
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