Air China

Beijing Airport warns of slump in earnings from fewer flights

PUBLISHED : Wednesday, 30 July, 2008, 12:00am
UPDATED : Wednesday, 30 July, 2008, 12:00am

Beijing Capital International Airport warned its first-half profit would fall significantly as traffic was reduced by new rules and slowing demand while costs surged.

The airport expected the unaudited net profit for the six months to June might fall substantially, it said in a filing to the Hong Kong stock exchange yesterday without disclosing an exact figure. It posted net profit of 566.66 million yuan (HK$647.61 million) for the same period last year.

Reasons for the lacklustre performance included anti-congestion flight restrictions, weakening demand amid a global economic slowdown, the cancellation of fights by airlines because of surging oil prices and the increase in operating costs for the newly built third terminal, it said.

Since last year, the industry regulator - the Civil Aviation Administration of China (CAAC) - had imposed capacity controls on mainland airports to ensure safety.

As a result, the daily flight throughput at the capital airport was reduced to 1,000 per day by the end of March this year from the more than 1,100 per day in the first half of last year, according to the CAAC.

Beijing Airport is the world's ninth busiest airport by passenger numbers and had been regarded as one of the beneficiaries of the forthcoming Olympic Games.

However, despite opening a third runway and a third terminal, passenger growth during the first five months of this year has been a low 0.5 per cent because of the flight restrictions and the new security and visa restrictions on travellers entering China, according to a recent research note by Merrill Lynch.

'International flights will be strong during the Olympics, but regular domestic visitors are likely to stay away,' the report said.

Costs have soared with the opening of the new terminal and the overruns at Beijing Airport's parent for building it have been widely criticised.

Beijing Airport leases the terminal from its parent for 240 million yuan a month in cash, which analysts regard as high.

The company's shares, which have slumped 48.5 per cent since the beginning of this year, closed down 1.86 per cent at HK$6.85 yesterday.