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Chinese airlines' profits decline

Publication Date : 12-07-2012

 

Major Chinese airlines may continue to suffer the reduced profits they experienced in the first half of 2012 following the first quarter's recession.

China Southern Airlines Co Ltd said recently that the company's net profits attributable to equity holders in the company for the first half year of 2012 are expected to fall by more than 50 per cent compared with the same period of 2011.

The carrier attributed the decline to the slowdown of China's economic growth.

Also, the substantial increase in the price of jet fuel and exchange losses due to the depreciation of the Chinese yuan against US dollars hit carriers, China Southern said in its statement.

The three largest Chinese airlines all suffered a decline in their profits in the first quarter of 2012, according to their finance reports.

China Southern's profit fell by 74.19 per cent, China Eastern Airlines Co Ltd's dropped by 73.68 per cent and Air China Ltd had an 85.7 per cent decline compared with the first quarter of 2011.

"The situation is even worse than in 2008, during the last financial crisis," Wang Changshun, chairman of Air China, said in an interview last month.

However, some business insiders are still optimistic about the second half of the year.

"I believe the second half of the year will be better," said Liu Shaoyong, president and chairman of China Eastern Airlines.

The large Chinese airlines are still pinning their hopes on the domestic market, which remains stable following the government's recent policy to stimulate domestic demand.

 

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