Air China profit surges more than fivefold
Air China said its third-quarter net profit surged more than fivefold due to rebounding travel demand and foreign exchange gains caused by the appreciation of the yuan.autos Updated: Oct 29, 2010 11:30 IST
Air China said its third-quarter net profit surged more than fivefold due to rebounding travel demand and foreign exchange gains caused by the appreciation of the yuan.
The carrier earned 5.2 billion yuan (771.2 million dollars) in the three months ending September 30, compared with 885.3 million yuan in the same period a year earlier, it said in a statement to the Shanghai Stock Exchange.
"Benefiting from the continuous rebound of the global air transportation market... the profit from operations of the company recorded a substantial growth," it said in the statement filed late Thursday.
The glowing earnings report did not help Shanghai-listed Air China's stock, which was suspended from trading on Thursday as shareholders approved a plan to buy 39 Boeing and 10 Airbus aircraft.
The shares slumped 4.4 per cent to 15.33 yuan on Friday as trading resumed and investors collected profits before the new expenditures.
Air China said on Wednesday that regulators had approved a private share placement in Hong Kong aimed at raising up to 1.04 billion Hong Kong dollars (134 million US dollars).
The flagship carrier said the consolidation of its subsidiary Shenzhen Airlines earlier this year had helped boost revenue, which grew by 77 per cent in the third quarter to 24.8 billion yuan from 14.1 billion a year earlier.
The company also benefited from a stronger yuan, which has appreciated by about two per cent since it was freed from a nearly two-year peg to the US dollar in June.
The strengthening yuan reduced costs for Chinese carriers, which borrow in foreign currency to pay for aircraft, while imported jet fuel costs fell.
Analysts expect the outlook for China's aviation sector to remain bright for the next two years as travel demand grows faster than the potential alternatives offered by a rapid expansion of high-speed railways.
The nation's air traffic grew by 17.8 per cent on year in the first nine months of the year, with international traffic jumping 34.7 per cent in the period.