Economy

China Eastern expects 50% net profit hike in H1

By Hou Lei (chinadaily.com.cn)
Updated: 2010-07-16 15:23

China Eastern Airlines said on Thursday it expects its first-half net profit to increase more than 50 percent due to the rapid growth of the domestic market and cost reductions after its consolidation with Shanghai Airlines.

The Shanghai-based stated-owned carrier, one of the top three airlines on the Chinese mainland, will expect a net profit of over 1.76 billion yuan ($260 million) in the first half of 2010. The number for 2009 was 1.17 billion yuan ($172.6 million), according to an announcement in Friday's China Securities Journal.

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China Eastern attributes its robust increase to the recovery of the global aviation industry and the rapid growth of the market in China; its successful integration with new subsidiary Shanghai Airlines; passenger service increase brought by the Shanghai World Expo as well as the improvement of its management.

On Monday, China Eastern Airlines Group, the parent company of China Eastern Airlines, posted a first-half net profit of 2.21 billion yuan ($326 million) on revenue of 35.4 billion yuan ($5.22 billion).

As of June 2010, China Eastern had 338 passenger and cargo transport aircraft as well as 18 general aviation airplanes.

It agreed to join the SkyTeam alliance this April and will become a formal member of the alliance in mid-2011.

The Civil Aviation Administration of China (CAAC) said on Tuesday that domestic airlines transported about 126 million passengers in the first six months of this year, which was an increase of 17.6 percent.

CAAC said the increase is the result of a sharp rise in air traffic demand.

The International Air Transport Association (IATA) predicted the global aviation industry will book $2.5 billion in profits this year.

Currently, about 30 percent of China Eastern's air service income comes from international routes, and it hopes to increase this proportion to 40 percent in 2010, the carrier's president Liu Shaoyong said earlier to Shanghai-based newspaper China Business News.

Liu also predicted that China Eastern would earn no less than 4 billion yuan from the 2010 Shanghai World Expo. It now has a 46.3 percent market share in Shanghai, the biggest among all airlines.

It is estimated that more than 11 million people will travel to Shanghai by air to visit the World Expo, and 3.5 million to 4 million of those will be foreigners. Analysts said China Eastern Airlines will fly about 50 percent of those travelers, according to an April 15 report on the financial news website Caing.com.

China Eastern has completed most of the business integration with Shanghai Airlines. The integration of marketing departments, domestic and foreign business premises, engineering and ground services departments as well as IT departments have been completed.

Its general manager Ma Xulun said the consolidation will save 680 million yuan ($100 million) of investment this year, according to an earlier report in China Business News.

China Southern Airlines, China Eastern's domestic rival, said on Thursday it flew 36.2 million passengers in the first half of this year, increasing 17 percent year-on-year.

Air China has not released its half-year business operation data yet but said on Tuesday that it flew 27.7 percent more passengers in June compared to the same period last year.