Air China Ltd, one of China’s three major state-owned carriers, said on Friday it lost 9.3 billion yuan ($1.3 billion) in 2008 due to surging fuel costs and wrong-way bets on fuel hedging contracts.
Air China said it returned to profitability in the first quarter of 2009 but earnings were down 6 per cent from the same time last year on weaker traffic.
The Beijing-based carrier’s full year loss was equal to 0.77 yuan per share, compared with a 2007 profit of 3.4 billion yuan or 0.31 yuan per share.
China’s two other major carriers, China Eastern Airlines Ltd and China Southern Airlines Ltd, also reported heavy losses for 2008.
Fuel costs for the year surged 31 per cent to 22.6 billion yuan ($3.3 billion), while passenger revenue fell slightly to 43.3 billion yuan ($6.3 billion), Air China said. A major drag on profit was a loss on wrong-way fuel hedging contracts.
Air China is regarded as the strongest of China’s airlines, but all have been battered by surging fuel costs and weak demand due to the global financial crisis.
The government has injected billions of yuan into the carriers and exempted them from a tax on fuel surcharges to help them through the crisis.
For the first quarter, Air China said profit was 981.2 million yuan ($143.2 million) as lower fuel costs helped offset a 12 per cent decline in revenue to 11.2 billion yuan ($1.6 billion) from a year earlier.