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To be specific, Air China Limited (SHSE: 601111; SEHK: 0753), China Eastern Airlines Co., Ltd. (SEHK: 0670; SHSE: 600115), and China Southern Airlines Co. Ltd. (SEHK: 1055; SHSE: 600029) separately profited CNY 885 million, CNY 23.15 million, and CNY 284 million, rocketing 144.9%, 100.99%, and 134.22% from a year earlier.
All of them further relieved the fuel cost pressure. Air China, for instance, saw its total fuel purchasing costs sag about CNY 2.5 billion year over year. From January to September, the Beijing-headquartered airways aggregately served 29.52 million passengers, with a 17% growth.
However, an aviation analyst at China Securities Co., Ltd. pointed out that the three companies' achievements were still below earlier expectations. They did not harvested prospective revenues from the core businesses, although China's aviation industry was getting ride of the global financial crisis, with a strong support of the central and local governments.
Their cheerful financial results should be mainly ascribed to the government subsidies and net profit on the changes in fair value from fuel hedging, according to most insiders. Excluding these factors, they aggregately lost CNY 219 million or so from their pillar businesses in the third quarter.
In particular, Air China and China Southern Airlines have separately obtained government subsidies of CNY 962 million and CNY 1.566 billion since early this year.
Along with the escalating fuel prices, China Eastern Airlines gained net profits on the changes in fair value from its fuel hedging contracts of CNY 154 million from July to September, and that of Air China largely rose 439.42% from the prior year to CNY 2.015 billion.
Presently, the world's crude oil prices have footed up to USD 80 per barrel, and this hiking ride is expected to continue, which will challenge the three aviation companies' future profitability, said people with the direct knowledge of the matter.
They are estimated to grow slower in the fourth quarter of this year, when the domestic aviation market will face the traditional slack season.
Last month, Airbus, a world-known aircraft manufacturer, forecasted that China and India would develop into the world's fastest-growing aviation markets in the following 20 years, and the US could be the biggest one as before.
(USD 1 = CNY 6.83)
Source: www.hexun.com (October 29, 2009)
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