A senior mainland government official yesterday reminded the country's airlines that they were in business to make money.
'Airline mergers are company moves, not government moves,' said Li Rongrong, head of the State-Owned Assets Supervision and Administration Commission, at a ceremony in Beijing to mark China Southern Airlines' entry into SkyTeam, one of the big three airline alliances. 'I just want them to report more profit.'
His comments come at a time when mainland airlines are in a dogfight for market position.
Air China, the country's most profitable airline, is seeking to beef up its fleet and market share to fend off competition from international carriers when Beijing allows more US airlines to fly to the mainland.
In the third quarter, Air China posted a 93 per cent year-on-year increase in net profit to 2.18 billion yuan, excluding one-off gains from its disposal of a stake in Hong Kong Dragon Airlines last year.
China Southern posted a 49 per cent rise in net third-quarter profit to 1.88 billion yuan, while China Eastern said earnings rose 98.67 per cent to 976.5 million yuan. But adjusting for yuan appreciation, which effectively reduces the impact of their US dollar loans, China Southern and China Eastern saw operating deficits.
'It is hard to accept when the economy is in such good shape - but those two carriers are still performing so badly,' said Kelvin Lau, an aviation analyst at Daiwa Institute of Research.