Yuan rise helps Chinese carriers
Air China and China Eastern await business travel pickup after forex gains prop up profits
Yuan appreciation helped shore up earnings at Air China and China Eastern Airlines in the first nine months of the year, with analysts predicting that fourth-quarter business could benefit from a recovery in business travel.
Air China earned 4.06 billion yuan (HK$5.17 billion), including a 2 billion yuan increase in exchange gains, against a profit of 4.2 billion yuan in the same period last year.
China Eastern posted net profit of 3.6 billion yuan, on par with last year, after its financial expenses fell 2 billion yuan, mainly due to exchange gains, it said in a filing to the Shanghai Stock Exchange yesterday.
"A stabilising economic outlook and increasing infrastructure investments suggest a better outlook for business travel demand," Davin Wu, a transport analyst at Credit Suisse, said in a report on Monday.
Falling airfares on the mainland have shown some signs of abating since last month. A full recovery in the core business of Air China and China Eastern, however, was still reliant on a rebound in the air cargo market, another analyst said.
Air China flew 58.5 million passengers in the first nine months, up 7.4 per cent year on year. It sold 81.7 per cent of seats, up 0.7 percentage point from a year earlier. Cargo volume rose 1.1 per cent to 1.07 million tonnes but its cargo load factor was 58.1 per cent, down half a percentage point.
China Eastern carried 59.8 million passengers in the same period, up 8.3 per cent year on year. Its cargo traffic inched up 1 per cent but cargo load factor fell 3.37 percentage points to 59.6 per cent.
Shares in Air China dropped 0.37 per cent to HK$5.42 yesterday, while China Eastern fell 0.38 per cent to HK$ 2.66.
Meanwhile, Shanghai International Airport, which operates two airports - Pudong and Hongqiao - in Shanghai, reported a 24 per cent increase in net profit to 1.46 billion yuan in the first nine months from a year earlier.
Guangzhou Baiyun International Airport said its net profit shot up 15 per cent to 664.6 million yuan in the nine months.