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August 26, 2009

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Air China income soars due to demand

AIR China more than doubled its net income in the first half of this year, bolstered by fuel hedging gains and rising domestic demand.

Its profit reached 2.93 billion yuan (US$429 million) from January to June, rising 151 percent from a year earlier, under domestic accounting standards, but revenue declined 12.7 percent to 22.4 billion yuan, it said in a statement to the Shanghai Stock Exchange yesterday.

The nation's flagship international carrier attributed the growth to the country's stimulus policies that boosted air demand in the first half.

It delivered 15.85 million passengers, up 18.74 percent from a year earlier to beat its expectations.

Cargo volume declined 16.23 percent from a year earlier to 423,200 tons because of waning demand, according to the statement.

"Its performance in the second half of this year will be better as the international air market has begun to recover," said Li Lei, an analyst at China Securities Co.

The Beijing-based carrier made a 1.5 billion yuan paper profit from fuel hedging in the period as oil prices rose 57 percent.

Air China is expected to deliver 39.7 million passengers this year and 967,000 tons of cargo. However, the carrier is still concerned that the global financial crisis will continue to impact its international business in the rest of this year and that rising oil prices will increase costs.

The carrier announced earlier this month that it has agreed to increase its stake in Cathay Pacific Airways to 29.99 percent from 17.49 percent to boost its international competitiveness and branding. The deal cements Air China's presence in the air hubs of Beijing and Hong Kong.


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