Chinese airlines bounce back

07 May 2009

BEIJING: China's major airlines have bounced back in the first three months of 2009 with increases in passenger numbers, seat occupancy and a return in most cases to profit.

This comes on top of buoyant first quarter car sales figures and shows clearly that, of all the economic stimulus packages from governments around the world, China's massive $586bn (€440bn, £389bn) boost last autumn has been the quickest to take effect.

China Southern Airlines, Shanghai Airlines and even the struggling China Eastern returned to profit in the first quarter after registering a combined loss of 30 billion yuan in 2008.

First quarter passenger numbers increased by 14.6% in the first quarter and seat utilization was up 0.5% to 75.9% according to figures from the Civil Aviation Administration of China.

“Thanks to CAAC's tax reduction measures, the cash-strapped carriers whose profits were falling and who had run up losses on bad derivative bets had a breather in Q1 of 2009,” commented CITIC ChinaSecurities analyst Li Lei.

A cut in jet fuel prices by 460 yuan per metric ton also helped the struggling airlines and further good growth is forecast provided fuel prices remain low.

However there is at least one dark cloud on the horizon; the threat of an outbreak of swine flu in China. The country has a huge pig population and any such outbreak would hit the economy and bring enforced restrictions on travel.

Data sourced from China Daily; additional content by WARC staff