Air China, China Southern report first-quarter profit decreases

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Published: April 29, 2011

Air China 737-800. Photo: Courtesy, Boeing.

Chinese airlines continue to post large profits, but Air China and China Southern Airlines both saw earnings dip in the 2011 first-quarter compared to the year-ago period, despite strong revenue growth.

CA reported net income of CNY1.67 billion ($ 255.8 million), down 23% compared to a profit of CNY2.17 billion in the March 2010 quarter. CZ earned CNY1.24 billion ($ 190 million), down 12.9% from a CNY1.42 billion profit last year.

CA credited the “continuous growth of domestic market demand,” stimulated by the gradual recovery of the Chinese economy, for its profit. But the airline cautioned, “The impact of the unstable political condition in North Africa, the earthquake in Japan and fluctuations in oil price have slowed down the growth of international traffic and cargo business.”

CA’s first-quarter revenue climbed 44.6% year-over-year to CNY21.25 billion while operating expenses jumped 43.9% to CNY19.42 billion. Traffic rose 37.9% to 28.83 billion RPKs on a 36.7% lift in capacity to 36.35 billion ASKs, pushing load factor to 79.3%, up 0.7 point.

Looking ahead, CA Chairman Kong Dong said he expects “greater room for growth this year generated by the continuous recovery of the global aviation industry, stable macroeconomic growth in China, and the increasing synergies with Cathay Pacific and Shenzhen Airlines.” But he warned, “Uncertainties still remain, such as sudden unexpected incidents, jet fuel price hikes, greater competition from high-speed railways and exchange rate fluctuations. We remain optimistic about the overall market this year yet will be prudent about our approach to business.”

CZ said robust domestic market growth was central to its first-quarter profit. Its revenue for the year’s first three months increased 21.5% to CNY20.51 billion while expenses rose 14.7% to CNY18.9 billion. Passenger boardings heightened 5.8% to 18.7 million with an average load factor of 79.9%, up 1.9 points. Cargo volume increased 5% to 262,690 tonnes.

CAAC has reported that Chinese carriers posted aggregate first-quarter net income of CNY5.73 billion, up 31.8% over the year-ago period( ATW Daily News, April 21 ).

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