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BIZCHINA / Center |
Air China profit drops 43% in 3rd quarterBy Wang Lan (China Daily)
Updated: 2007-11-01 10:05 Air China, the country's largest carrier, yesterday said its third-quarter net profit amounted to 2.1 billion yuan (US$280.7 million), down 42.55 percent from the same period of the previous year, when earnings were inflated by a one-off extraordinary item. In a statement to the Shanghai Stock Exchange, the company said it posted net earnings of 3.48 billion yuan on sales of 37.21 billion yuan in the first nine months. Earnings per share were 0.184 yuan in the third quarter compared with 0.287 yuan in the first nine months. The third-quarter return on net assets was 7 percent, down 2.73 percentage points from the previous year. The return on net assets in the first nine months was 11.16 percent. Analysts said the lower earnings for the third quarter of 2007 were largely accounted for by the fact that the third quarter of 2006 was boosted by the 1.84 billion yuan gain from the sale of a stake in Hong Kong Dragon Airlines. Stripping out the gains from that share sale, the third-quarter net profit would have risen 93 percent from the corresponding period last year, the company said yesterday in a report to the Hong Kong stock exchange. Analysts said airline companies' profits are expected to shrink in the fourth quarter as the tourism off-season approaches. Li Lei, an analyst at CITIC China Securities, said the steady increases of passenger-seat ratio, or load factor, and the effective control of operating costs would remain the major contributors to the profit margin of airline companies. "Airline companies are expected to compete with each other by increasing their profit margins by reducing the operating costs and improving the load factor," said Li. "Anticipation of renminbi appreciation and flight route resources will give Air China more growth space." In the three months running up to the end of September, Air China's revenue rose 11 percent to 14.5 billion yuan, compared with the first nine months' revenue increase of 15 percent from the year before. Operating costs in the third quarter rose 3 percent to 10.3 billion yuan from the previous year, while they climbed 10 percent in the first nine months.
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