Research On Eastern Airlines' Choice Of Debt Financing And Derivative Financial Instruments To Deal With Exchange Rate Fluctuation

With the exchange rate reform in 2015,the renminbi has experienced a significant depreciation,resulting in huge exchange losses caused by airlines,which seriously eroded net profit.How to deal with the risk of exchange rate fluctuations in various ways is an issue that airlines need to solve in the context of “exchange reform”.This paper mainly analyzes the measures taken by Eastern Airlines in dealing with the risk of exchange rate fluctuations and the effects and shortcomings of the measures.It attempts to summarize the common exchange rate risk management measures of airlines and improve the airline's exchange rate risk management system.This article is divided into five parts.The first part includes the research background,research purposes and significance,research ideas and methods.The second part introduces the theoretical basis related to the research topic of this paper and summarizes the existing research results at home and abroad.The third part is a case study introducing the credit structure of Eastern Airlines and the risk of exchange rate fluctuations.The fourth part is a case study to explore the choice of debt financing structure and the choice of derivative financial instruments for Eastern Airlines in the two-way fluctuation of exchange rate in 2013-2017.The fifth part is the conclusions and recommendations.It summarizes the debt financing preferences of airlines in the face of exchange rate risk and proposes improvements to exchange rate risk managements.This paper finds that during the period of RMB depreciation,the choice of debt financing structure of Eastern Airlines in response to exchange rate fluctuation risk is reflected in the following aspects: First,the use of flexible operating leases to introduce aircraft alternative financing leases;second,the use of RMB Corporate bonds,corporate bonds and medium-term notes replace long-term foreign currency borrowings;third,the use of short-term financing bonds to replace short-term foreign currency borrowings.In addition,Eastern Airlines chose interest rate swaps and foreign exchange forward contracts for hedging,but the results were not good.