Shares in China Eastern Airlines rose more than 7 per cent yesterday after a mainland report said the troubled carrier had swung back to profit in the first half. The airline was able to cut costs while market conditions improved, the Shanghai Securities News said yesterday, citing an internal company meeting. China Eastern cut 'controllable' costs by 12 per cent or 113 million yuan (HK$128.2 million), the report said, although the company did not disclose its actual earnings for the period. The listed unit of China Eastern Air Holding posted a net loss of 212.5 million yuan for the first half of last year, based on international accounting standards. For the full year, it posted a worse than expected net loss of 15.29 billion yuan owing to huge unrealised losses on fuel-hedging contracts and write-downs on the value of its aircraft. 'The narrowed hedging loss due to higher international oil prices is the main factor for China Eastern returning to profits,' said analyst Li Lei at Citic China Securities. Battered by rising fuel costs, China Eastern and other airlines hedged their costs as oil prices rose towards a peak of US$147 a barrel in July last year. As oil prices plunged, reaching US$45 a barrel in late December, their unrealised hedging losses ballooned. Now that oil has risen to about US$68 a barrel, the hedging losses are easing. Spokesman Luo Zhuping could not be reached for comment. China Eastern's shares closed 7.28 per cent higher yesterday at HK$2.21, while China Southern Airlines' climbed 7.95 per cent to HK$2.58. China Eastern's board secretary said in April that the airline could return to profit this year as the domestic air travel market picked up. Air China, the country's flag carrier, which had a 7.7 billion yuan paper loss from fuel-hedging contracts last year, said earlier its first-half profit rose more than 50 per cent on lower fuel costs and solid growth in travel demand.