Cathay Pacific

Air China sees 27pc decline in earnings

PUBLISHED : Friday, 28 October, 2011, 12:00am
UPDATED : Friday, 28 October, 2011, 12:00am

Battered by falling international air traffic and smaller profit contributions from Cathay Pacific Airways, Air China saw its earnings plunge 26.46 per cent year on year to 3.8 billion yuan (HK$4.63 billion) in the third quarter.

Meanwhile, China Southern Airlines, which gets 80 per cent of its income from domestic routes, reported 3.13 billion yuan in profit for the past three months, up by 3 per cent from a year earlier.

Air China, which owns a 30 per cent stake in Cathay, suffered a setback as investment from its associated companies, including Cathay, dropped to 583.9 million yuan in the quarter from 889.5 million yuan in the same period last year, according to an announcement on the Shanghai Stock Exchange yesterday.

China Southern has been more resilient to the recent financial turmoil in the US and Europe. But after the challenge from high-speed trains, the carrier has been forced to expand its international network by acquiring long-haul aircraft.

'We expect to take delivery of the first Boeing 787 in August or September next year,' said Xie Bin, company secretary of the Guangzhou-based carrier. China Southern will be the first mainland carrier to operate the 787 Dreamliner.

Air China, as the first mainland carrier to develop biofuel, will launch a test flight today. The long-awaited test flight - originally planned for August - will be the first time a mainland carrier has used the fuel, a 50-50 mixture of locally-made biofuel and traditional kerosene, on its aircraft.

It was understood the passenger-free Boeing 747 flight will depart from Beijing Capital International Airport at around 8.30am today, and the pilot will test the fuel's performance at various altitudes and speed for about an hour before returning to its base. Air China told mainland media earlier that it would seek to test the fuel on long-haul and commercial routes.

Shares in China Southern rose 7.8 per cent to HK$4.83 yesterday while Air China closed 4.9 per cent higher at HK$6.45.