Fuel hedging gains have helped China Eastern Airlines return to profitability in the first half, despite a 15.6 percent slump in revenue.
The airline also remained bullish for the second half, saying economic growth in China remained strong and that it would benefit from World Expo which is being held in Shanghai next year.
The carrier, which is one of China’s big three airlines, reported a net profit of Rmb984.7m, compared with a loss of Rmb175.3m in the same period last year.
Revenues fell 15.6 per cent to Rmb16.17bn.
The airline made a Rmb2.79bn profit from fuel hedging in the first six months of this year after a rise in oil price, contrasting with a Rmb15.3bn loss last year on hedging that led to the airline receiving Rmb7bn in state aid.
China Eastern’s performance mirrors that of Hong Kong’s Cathay Pacific, which last week reported a profit for the first half thanks to similar fuel gains despite falling revenues.
Domestic traffic rose 27 percent from the same period last year, largely due to the state bail-out, offsetting large falls in demand on its international and regional routes.
But total revenue fell sharply because intensified competition had put pressure on fares. Turnover on international and regional routes dropped 38.3 percent and 22.3 percent respectively. The global financial crisis also hit its cargo arm, where sales fell 44.7 percent.
“China’s economy would become the key pivot for the stability and recovery of the world’s economy. The aviation market demand will be boosted under the economic transformation of the PRC, expansion in investment and encouraged consumption of China,” said Liu Shaoyong, chairman.