Air China To Add Planes, Boost Capacity

April 26, 2010

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Air China said on Monday it would add nearly 100 new planes to its fleet by 2012 and boost capacity as demand rebounds in the world's third largest economy.

Shares of Air China rallied on its strong results and outlook, gaining 3.25 percent in Hong Kong and 1.15 percent in Shanghai, outpacing the broader indexes in both markets.

Air China, which competes with China Eastern Airlines and China Southern Airlines, reported a 121 percent jump in its first quarter earnings on robust air traffic demand and a hefty CNY938 million yuan (USD$137.4 million) in fuel hedging gains.

Full year fuel hedging gains should total roughly CNY2 billion, Air China executives told reporters on the sidelines of a company event.

Chinese carriers faced severe headwinds in 2008 as a slowing economy dented air travel. The situation started to improve in 2009 helped by government cash aid, fee waivers and a warming up of the domestic air travel market.

Air China, which operated a fleet of 262 planes at the end of 2009, will take delivery of 96 planes between now and 2012 as it speeds up its capacity expansion and retires older planes from its fleet, chairman Kong Dong told reporters.

It said it expected its net capacity to grow 10-12 percent this year, while capital spending will reach CNY15 billion, up from CNY10 billion last year.

While maintaining its dominance in North China, Beijing-based Air China is also speeding up expansion in Shanghai, home base of China Eastern.

Air China aims to have a 20 percent share of the air travel market in Shanghai by the end of 2015, up from 10-12 percent currently, company executives said.

(Reuters)