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State bail-outs lift Chinese airlines

Government bail-outs have helped China’s struggling airline industry weather the downturn in the first quarter of 2009, according to Li Jiaxiang, vice-transport minister and administrator of the Civil Aviation Authority of China.
China’s aviation industry registered a cumulative profit on the back of a rise in domestic and cargo numbers, marking a sharp contrast to the huge losses in 2008, said Jiaxiang. Total passenger and cargo volumes for all Chinese airlines in the first quarter rose by 1.2 percent from a year earlier, according to official figures.The growth was spurred by a healthy 13.6 percent rise in domestic volumes in the first quarter. However the volume of cargo and passengers carried by Chinese airlines on international routes slumped 21.5 percent.
“Of course, CAAC’s measures to reduce taxes and return some cash to airlines has had an effect,” Mr Li told the Financial Times in Beijing yesterday. “But most important is that China’s domestic passenger transport volumes remain on a positive growth trend.”
“The rebound in China’s domestic civil aviation market has been quite large and this is a result of the government’s measures to stimulate domestic demand and ensure economic growth,” he continued.
However China’s main carriers are due to announce their annual results for 2008 next week, which are expected to show massive losses.