Related News
Air China expects to fly into its first annual loss
By Irene Shen |
January 19, 2009, Monday
|
Print Edition
Print Edition
AIR China Ltd, the nation's largest international carrier, expects to report its first annual loss in at least eight years on waning travel demand and wrong-way bets on fuel prices.
The carrier made paper losses of 6.8 billion yuan (US$994.5 million) on fuel-hedging in 2008, it said on Friday in a Hong Kong stock exchange statement. The airline made a 3.88-billion-yuan annual profit in 2007.
Air China joins China Southern Airlines Co and China Eastern Airlines Corp in forecasting a 2008 loss after the nation's cooling economy damped business and leisure travel. The Beijing-based carrier also reported hedging losses after jet-fuel prices tumbled 70 percent in less than six months.
"Air China is more exposed to the global crisis" than China Southern and China Eastern, said Li Jun, an Everbright Securities Co analyst in Shanghai. "As such, most of its advantages turned into disadvantages last year."
The carrier has been profitable since at least 2000, data complied by Bloomberg News showed, helped by having a wider overseas network than domestic rivals.
"The aviation market experienced a general shrinking demand in 2008 and traffic revenue was significantly lower than expected," the Beijing-based company said in the statement. The hedging contracts "will have a considerable effect on the financial results for the year."
The airline is also able to hedge a greater proportion of its fuel needs than rivals, as Chinese carriers are barred from hedging purchases of fuels for domestic flights. That has previously enabled Air China to limit the effect of increasing fuel prices.
The airline's passenger numbers fell 1.7 percent in 2008 to 34.2 million, the first decline in five years. Its cargo and mail volume dropped 3.8 percent to 898,962 tons.
The shares have dived 80 percent in the past year and closed 3.9 percent higher at HK$1.88 (24 US cents) a share on Friday in Hong Kong trading.
The carrier made paper losses of 6.8 billion yuan (US$994.5 million) on fuel-hedging in 2008, it said on Friday in a Hong Kong stock exchange statement. The airline made a 3.88-billion-yuan annual profit in 2007.
Air China joins China Southern Airlines Co and China Eastern Airlines Corp in forecasting a 2008 loss after the nation's cooling economy damped business and leisure travel. The Beijing-based carrier also reported hedging losses after jet-fuel prices tumbled 70 percent in less than six months.
"Air China is more exposed to the global crisis" than China Southern and China Eastern, said Li Jun, an Everbright Securities Co analyst in Shanghai. "As such, most of its advantages turned into disadvantages last year."
The carrier has been profitable since at least 2000, data complied by Bloomberg News showed, helped by having a wider overseas network than domestic rivals.
"The aviation market experienced a general shrinking demand in 2008 and traffic revenue was significantly lower than expected," the Beijing-based company said in the statement. The hedging contracts "will have a considerable effect on the financial results for the year."
The airline is also able to hedge a greater proportion of its fuel needs than rivals, as Chinese carriers are barred from hedging purchases of fuels for domestic flights. That has previously enabled Air China to limit the effect of increasing fuel prices.
The airline's passenger numbers fell 1.7 percent in 2008 to 34.2 million, the first decline in five years. Its cargo and mail volume dropped 3.8 percent to 898,962 tons.
The shares have dived 80 percent in the past year and closed 3.9 percent higher at HK$1.88 (24 US cents) a share on Friday in Hong Kong trading.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
