Airline also to share in US$4.6b Boeing deal Hu will seal in US Air China, the only airline among the mainland's big three to make a profit last year, will spend nine billion yuan on new planes this year. 'We have to cope with the expansion plan of the Chinese civil aviation [industry] on one hand and improve the productivity and load factor on the other hand,' Ma Xulun, the company's president, said yesterday. 'We will definitely expand in a way that is much slower than the whole Chinese civil aviation industry does,' Mr Ma said, without disclosing details. The General Administration of Civil Aviation of China has projected 14 per cent growth for the industry from 2006 to 2010. Mr Ma said about nine billion yuan of 11.2 billion yuan capital expenditure for 2006 would be used to finance downpayments on new deliveries during the next two years. The company is expecting to take delivery of 35 previously ordered aircraft this year, mainly Boeing 737, Airbus 330, 319 and 320, which will bring its total number of planes to 208. Air China also will share in a US$4.6 billion deal for 80 Boeing 737s to be finalised during President Hu Jintao's visit to the US. The airline beat market expectations with a 1 per cent increase in net profit to 2.4 billion yuan last year while others made a loss or had substantial declines in bottom lines. The country's third-biggest carrier, China Eastern Airlines Corp, reported a loss for last year and Guangzhou-based China Southern Airlines - scheduled to announce earnings today - said earlier it had probably finished in the red. Air China's surprise result came mainly from a new accounting system implemented by the company last year. Appreciation of the yuan which helped cut US dollar-denominated loans contributed 970 million yuan in income. Management told analysts the new accounting system saved 1.64 billion yuan. The change in depreciation of parts and components contributed 890 million yuan of cost savings and the capitalisation of maintenance fees contributed 500 million to 600 million yuan. Some analysts were not impressed. 'The underlying business of Air China is disappointing if without the exceptional gain,' said an analyst from an US security firm. 'The forecast-beating result is mainly due to the invisibility of its accounting standard.' The revenue per passenger per kilometre was 57 fen last year, up by 1.8 per cent. The unit cost per seat per kilometre is 45 fen, up by 7 per cent. The carrier flew 27.7 million passengers last year, a 13 per cent increase on 2004. Fan Cheng, executive director of Air China, said fuel hedging had saved 220 million yuan and 184 million in savings came from minimising unit fuel consumption. The cost of jet fuel - 34 per cent of operating cost - totalled 11.8 billion yuan from 8.4 billion yuan in 2004.