SHANGHAI - CHINA Eastern Airlines, the country's third largest carrier, on Monday warned it expected to post a 'significant loss' for 2008 due to fewer passengers and bad bets on fuel hedging contracts.

The company said it faced an unaudited loss of about 6.2 billion yuan (S$1.34 million) alone due to fuel hedging contracts last year, according to a statement filed with the Shanghai Stock Exchange.

The statement said a 'significant loss will be recorded for the company in 2008'.

The company is scheduled to release its annual results for last year in mid-April.

'A pronounced global economic recession since the second half of 2008 led to a drastic decrease in air transportation demand. As a result, the civil aviation industry is facing an industry-wide crisis,' China Eastern said.

The airline said last week the number of passengers it carried in 2008 was down 5.4 per cent from 2007 at 37.05 million as the global economic crisis halted years of double digit growth.

China Eastern posted a 2.3-billion-yuan loss in the first nine months of the year.

Last month it said it would receive a seven-billion-yuan capital injection from the government, which would cut its debt-to-asset ratio to 90.1 per cent from the 98.5 per cent it stood at by the end of September.