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BIZCHINA / Center |
Air China profits surge 2,000%(FT.com)
Updated: 2007-07-26 11:46 Air China on Wednesday said profits soared in the first half due to the strengthening Chinese currency, investment gains and a booming travel market. The carrier said its net profit increased more than 2000 percent to at least 900 million yuan ($119 million) for the first six months, up from the 45 million yuan it reported in the first half of 2006. "The most significant reason for our profitability from an operational point of view is the huge demand for domestic and international air travel in China," said Rao Xinyu, Air China's general manager of investor relations. "But currency appreciation and our investment gains were a larger contribution to our overall profits." The renminbi appreciated 2.5 per cent against the US dollar in the first half, compared with 1 per cent for the corresponding period in 2006, making it cheaper for Air China to repay some of its outstanding 37.4 billion yuan in foreign exchange-denominated debt, 85 percent of which is in US dollars. The company also made about 300 million in the first half from the 17.5 percent stake in Hong Kong airline Cathay Pacific it bought late last year. The consensus estimate for Air China's earnings for the whole year is 3.3 billion, more than three times its projected earnings in the first half. China's air travel market rose nearly 15 per cent to 86 million passengers in the first six months of the year. But "the fundamentals of the Chinese airlines are still quite weak", said Karen Chan, transport analyst at Credit Suisse in Hong Kong. |
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