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Airline's first-half net income takes off

AIR China's net income is expected to show a rise of more than 50 percent in the first half of this year thanks to falling fuel costs and an increase in passenger numbers.

"The result is contributed by the decrease in negative fair value from fuel hedging, stable growth in domestic air market, stimulus policies from the government and the company's efforts in controlling costs," the Beijing-based carrier said in a statement to the Shanghai Stock Exchange yesterday.

Its first-half profit may reach 1.92 billion yuan (US$281 million), or 0.17 yuan per share, it said.

The carrier said that when the benchmark West Texas Intermediate crude price rises 40 percent from the end of last year, its fuel hedging loss will narrow by 4.1 billion yuan.

When WTI rises 60 percent, the loss will narrow by 5.1 billion yuan, and when it rises 80 percent, 5.8 billion yuan.

Air China suffered a loss of 9.3 billion yuan for last year due to surging fuel costs and wrong-way bets on fuel hedging contracts.

China Eastern Airlines and Shanghai Airlines recently announced a merger to enhance their share in the Shanghai market to more than half, which is expected to threaten Air China's performance in the city.

However, Air China's board secretary Huang Bin said the carrier had yet to work out a plan to adjust its strategy in Shanghai.


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