Despite a significant slowdown in China's overall growth last year, the country's three biggest airlines reported huge increases in profit due to reduced fuel costs and thanks to more Chinese traveling abroad.
Image: picture-alliance/dpa/X. Qintao
Advertisement
The Asian powerhouse's flagship airline, Air China, announced a 77.5-percent jump in earnings for 2015 boosted by record low fuel prices and robust leisure and business travel demand. Net profit was 6.8 billion yuan (629 million euros, $1.05 billion), up from 3.8 billion yuan 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 5.2-billion-yuan foreign exchange loss, due to a weakening domestic currency.
"Although low fuel prices have helped to ease the pressure on operating costs, intensified industrial competition and substantial exchange rate fluctuations have posed severe challenges," the carrier said in a statement.
Last year, the Chinese government launched a shock devaluation of the yuan, guiding the normally stable currency nearly 5 percent lower, and slowing growth has kept up downward pressure on the currency.
Chinese are big tourism spenders
01:09
This browser does not support the video element.
More Chinese travelers
In 2015, all of China's three biggest airlines abandoned advance 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.
This also helped the bottom lines of China Southern Airlines and China Eastern Airlines - number two and three in the country's air traffic market.
China Southern Airlines, for example, reported a doubling in net profit for 2015 to 3.74 billion yuan. "The group seized the opportunity of decreasing fuel prices and increasing outbound tourism, which significantly improved the profit level," it said in a statement.
China's growing middle class has boosted passenger numbers in recent years, with overseas travel topping more than 100 million in 2014. Foreign travel is tipped to grow another 10 percent this year as destinations such as the US, France, Australia, and, most recently, Britain have eased visa policies.
According to industry analysts, the opening of a new Disney theme park in commercial hub Shanghai could further increase passenger numbers. Yu Nan, an analyst at Haitong Securities, told the news agency AFP that the June opening of the Disney park would "boost the business of airlines in the third quarter."
China Eastern Airlines reported a rise of just over 33 percent in net profit to 4.54 billion yuan.
uhe/hg (AFP, Reuters)
A look at the first made-in-China passenger aircraft
In a significant boost to China's efforts to catch up with industrialized countries on the high-tech front, a state-owned Chinese manufacturer has unveiled the East Asian nation's first large passenger plane.
Image: Reuters
'A significant milestone'
Commercial Aircraft Corp. (COMAC) presented its new creation to the world on November 2 — the C919 jet. The single-aisle plane, which can seat up to 168 passengers and has a range of up to 5,555 kilometers (3,452 miles), was unveiled in Shanghai. "The rollout of the first C919 marks a significant milestone in the development of China's first indigenous aircraft," said COMAC chief Jin Zhuanglong.
Image: picture-alliance/dpa
An impressive ceremony
About 4,000 government officials and other guests were present at the ceremony that took place at a hangar near Shanghai's Pudong International Airport. A small truck towed the 39-meter-long plane out of a cavernous building decorated with an enormous Chinese flag.
Image: picture-alliance/AP Photo
A delayed entry
Development of the twin-engine C919 started in 2008. Plans called for a first flight in 2014 and for it to enter service in 2016, but those targets were pushed back due to production delays. The aircraft is now expected to enter service in 2019 at the earliest.
Image: picture-alliance/dpa
Foreign support
Although the C919 is made in China, many of the plane's critical systems such as engines and avionics are being supplied by either foreign firms or joint ventures between Chinese companies and Western manufacturers.
Image: picture-alliance/dpa
A huge market
China is one of the world's biggest aviation markets, with Boeing projecting the country's total demand for civilian aircraft over the next two decades to be worth over $800 billion. Boeing and Airbus, the European aviation giant, have long eyed the lucrative market and want to position themselves as the main suppliers of planes to China.
Image: Getty Images/ChinaFotoPress
Moving up the value chain
However, China's leadership has been striving to transform the country from being the world's factory of low-cost goods into a manufacturer of high-tech products. The development of the C919 is part of these restructuring efforts and helps the country ascend the product value chain and become a maker of high-value items.
Image: Getty Images/AFP/J. Eisele
Increased competition?
The single-aisle C919 is expected to compete with Airbus' A320 and Boeing's 737 for market share, not only in China but also in other markets. The plane's maker, COMAC, says it has already received orders for 517 of its jets from 21 customers. While most of the orders come from China-based carriers, there are also a few from foreign ones.
Image: Getty Images/AFP/J. Eisele
Big business
The unveiling of the C919 came just days after Airbus signed contracts with Chinese partners on the delivery of 100 A320 passenger planes and 30 A330 aircraft worth €15.4 billion ($17 billion). The deals were signed during German Chancellor Angela Merkel's recent visit to China.
