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January 14, 2010

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Chinese airlines turn profitable

CHINA'S civil aviation industry flew into the black with a net profit of 12.2 billion yuan (US$1.79 billion), bolstered by booming demand for air travel.

The profit marked a huge improvement for Chinese airlines after the industry posted a record 28 billion yuan loss in 2008, according to the Civil Aviation Administration of China.

Domestic carriers broke the 200 million passenger barrier for the time last year when they flew 230 million travellers, a rise of 19.7 percent from a year earlier, Wang Changshun, vice director of the administration, said yesterday. Their cargo volume rose 9.3 percent to 4.46 million tons, he said.

Domestic carriers earned 7.4 billion yuan in net profit, compared with a loss of 31.8 billion yuan in 2008, and revenue totaled 212 billion yuan, Wang said.

Of the domestic carriers, Air China earned the most last year while China Eastern Airlines and China Southern Airlines sharply reduced their losses and became profitable in 2009, he said without revealing figures.

China Eastern Airlines, which made a huge loss of 14 billion yuan in 2008, said in December that it expects a net profit of 600 million yuan for last year.

Domestic carriers, led by China Eastern, plunged into the red in 2008 on waning demand and fuel-hedging bets gone wrong. But they began to make profit from fuel hedging after the global oil price more than doubled to about US$80 a barrel from February last year.

The National Development and Reform Commission resumed fuel surcharges in November to subsidize the carriers against the higher jet fuel costs.

The International Air Transport Association estimated that world airlines would lose US$11 billion in 2009. IATA revised losses for 2010 to an expected US$5.6 billion globally.


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