Air China 2015 Profit Jumps 77.5 Percent

March 30, 2016

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Air China's 2015 net profit jumped 77.5 percent, boosted by low fuel prices and robust leisure and business travel demand.

Net profit was CNY6.8 billion yuan, up from CNY3.8 billion a year earlier.

Air China's fuel bill, which accounts for about 40 percent of its operating costs, fell 30.4 percent from the year-ago level.

However, it booked a CNY5.2 billion yuan (USD$803 million) foreign exchange loss, due to a weakening yuan. The after-tax profit of its cargo joint venture with Cathay Pacific Airways also dropped 87.7 percent from a year ago.

The airline, like many Chinese peers, abandoned hedging to cover variations in fuel costs after being hit by wrong-way bets late in 2009. As a result, these carriers reap the full benefit when oil prices slide.

China Eastern Airlines' 2015 net profit rose 32.9 percent to CNY4.5 billion yuan, while China Southern Airlines' net profit for the year rose 117 percent to CNY3.9 billion.

A bigger contribution from its 30 percent-owned partner airline Cathay Pacific Airways also helped earnings.

The carrier's performance was also helped by the number of Chinese tourists going abroad, which topped 100 million in 2014 for the first time. Foreign travel is tipped to grow another 10 percent this year as destinations such as the United States, France and Australia and, mostly recently, Britain ease visa policies.

(Reuters)