Air China profits decline on rising fuel costs; international passengers and cargo weakness

Air China reported a 12% reduction in first half (six months to 30-Jun-2011) net profit to CNY4.06 billion (USD634 million) amid "continuous depression of western economy,” “unstable political situation in North Africa” and “surging fuel prices.” The increased cost base, driven by the higher fuel costs, offset a double-digit increase in revenues, which was boosted by steadily increasing domestic market demand. Air China's weaker first-half profit contrasts with competitor China Southern Airlines, which reported a 33% gain in first-half net profit to CNY2.76 billion on strong demand for air travel. [2288 words]

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This report contains the following subheadings:

• 31% revenue growth outpaced by 36% increase in operating expenses
• Capacity, passengers levels, load factors and yields increase in 1H2011
• Benefits from robust domestic demand; international sales decline
• Cargo revenues increased but yields weaken
• Net addition of 18 aircraft in 1H2011 for 411 aircraft fleet
• Cathay Pacific and Shandong Airlines report profits; Air China Cargo, Beijing Airlines and Dalian Airlines established
• Air China launches Dalian Airlines and invests in Tibet Airlines
• Uncertain outlook and increased competition; but benefiting from domestic demand and synergies

This report contains the following charts and tables:

• Shares comparison for Hainan Airlines, China Southern, China Eastern Airlines, Cathay Pacific, Air China for the last 12 Months
• Air China operating profit margin vs net profit margin (%): 2006 to 1H2011
• Air China operating revenue growth vs operating cost growth: 2006 to 1H2011
• Top 10 Chinese airlines airlines (system seats): 22-Aug-2011 to 28-Aug-2011
• Air China Limited, China Eastern Airlines, China Southern Airlines available seat kilometres (International) comparison from Jul-2008 to Aug-2011
• Air China Limited international capacity (seats) by region (22-Aug-2011 to 28-Aug-2011)
• Wide-body aircraft due to 2012: Top 30 carriers
• Air China fleet (at 22-Aug-2011)
• Air China operating expenses: Six months to 30-Jun-2011
• Air China revenue contributed by geographical segment: Six months ended 30-Jun-2011
• Air China air passenger revenue contributed by geographical segment: Six months ended 30-Jun-2011
• Air China cargo revenue contributed by geographical segment: Six months ended 30-Jun-2011
• Air China Limited fleet breakdown for in service aircraft  (at 22-Aug-2011)
• Air China Limited fleet breakdown for on order aircraft (at 22-Aug-2011)