Airline's profit soaring

(Shanghai Daily)
Updated: 2007-07-18 14:19

Hainan Airlines Co, a Chinese carrier in part backed by United States billionaire George Soros, said first-half profit probably surged more than eightfold on lower jet-fuel prices and a stronger yuan.

Net income in the six months ended on June 30 likely jumped more than 750 percent, the Haikou, Hainan Province-based company said in a Shanghai stock exchange statement yesterday. That would mean a profit of at least 176.8 million yuan, according to Bloomberg calculations.

China's fourth-biggest carrier and others in the country have improved profitability as a stronger yuan cuts the value of their dollar-denominated debt and the government lowers fuel prices. The nation's 20 airlines made a profit in May, the first time they have all been profitable in the same month, according to the General Administration of Civil Aviation.

"China's airline industry will see an overall recovery," said Li Lei, an analyst at CITIC China Securities Co. "The carriers will continue to benefit from the stronger yuan in the coming years."

China cut jet fuel prices three times in the first half of the year. Fuel accounts for about 40 percent of Chinese carriers' costs.

Hainan Airlines, which owned 126 planes as of April, flies about 500 routes to 90 cities, according to the company's website. It flew 14.4 million passengers and 198,700 tons of cargo last year.

The airline's shares have gained 84 percent this year, while those of China Southern Airlines Co, the nation's biggest carrier, have more than doubled in Shanghai.

Hainan Airlines has also benefited from the growth of tourism to Hainan Province, a subtropical island popular with both overseas and domestic tourists. Overseas tourism numbers have grown nearly 40 percent a year since 2004, exceeding half a million last year, according to a June 19 Citigroup Inc report.


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