Chinese airlines suffer losses in 2012

July 21st, 2012 - 11:52 am ICT by IANS  

Beijing, July 21 (IANS) Three major airlines in China have all reported more than a 50 percent drop in profit in the first six months this year, but earnings are expected to recover in the second half, market analysts said.

Air China, the country’s flagship carrier, said it predicted the first-half profits to have fallen more than 50 percent from a year earlier.

In the first half of 2011, Air China reported a net profit of 4.063 billion yuan (around $645 million). The actual profit for 2012 was not disclosed.

The company blamed weak travel demand, high fuel prices and fluctuation in foreign exchanges for the loss.

Earlier this month, both China Eastern Airlines and China Southern Airlines, two other major carriers, estimated their first-half profits to decline more than 50 percent.

The Shanghai-based China Eastern Airlines reaped a net profit of 2.45 billion yuan in the first half of 2011.

But market analysts say they expect the earnings to recover in the coming months, especially during the summer travel peak season.

Fuel prices, meanwhile, are also in the decline, helping airlines to cut operation costs.

UBS Securities analysts said both China Eastern and China Southern can expect domestic travellers to grow by eight percent year-on-year in July, while Air China can also expect a seven percent rise of domestic travellers from a year earlier.

Profits of the three airlines are expected to stabilise or start to grow in the third quarter compared to the same period last year, analysts said.

Liu Shaoyong, board chairman of China Eastern, also said he expected the company’s earning to grow in the second half.

“For the whole year, China Eastern will not be in red, but profit margins might shrink from a year earlier,” he said.

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