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Government support keeps airline in black

SHANGHAI Airlines extended a weak performance in the first quarter of this year because of waning travel demand but government support helped it return to the black.

Its net income fell 28.72 percent from a year earlier to 26.27 million yuan (US$3.84 million), or 0.024 yuan a share, and its revenue declined 20 percent to 2.73 billion yuan, the carrier said in a statement to the Shanghai Stock Exchange today.

The carrier will post a net loss of 0.117 yuan per share excluding government support worth 153 million yuan, according to the statement.

"Lower ticket prices, the reduction of fuel surcharges and foreign exchange losses dampened the carrier's income despite a warming travel market in late March," it said.

In the period, Shanghai Air's paper loss on fuel hedging shrank to 3.57 million yuan, it said.

Shanghai Air has received special treatment, a daily trading cap of 5 percent in either direction, after reporting two straight years of losses - 1.25 billion yuan in 2008 and 435.12 million yuan in 2007.

A third-year loss would delist the carrier from the Shanghai bourse. Zhou Chi, chairman of the carrier, said earlier this year that Shanghai Air may be profitable this year if its figures recover in April and May.

He said the year will be tough and the company is cutting salaries and reducing capacity to save costs, but there were no plans to lay off employees.

The carrier has secured a 1-billion-yuan cash injection from its state-owned shareholder - Jinjiang International Holdings Co - to replenish its working capital and repay loans.


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