By Joanne Chiu
China Eastern Airlines Corp. (0670.HK) posted a sharp rise in
first-half profit, thanks to strong growth in air traffic and lower
fuel prices during the year.
The Shanghai-based carrier said net profit for the six months
ended June 30 was 3.56 billion Chinese yuan ($556.4 million),
according to Chinese accounting standards, up from a net profit of
CNY15 million. The result was in line with a net profit forecast of
CNY3.50 billion to CNY3.70 billion issued by the carrier in
July.
The carrier's first half revenue rose 3.9% to CNY44.31 billion
from CNY42.65 billion on higher air travel demand. Its fuel costs
amounted to CNY10.6 billion, down 29% from a year earlier.
Robust outbound air travel demand and lower fuel prices have
buoyed China Eastern's profitability in the first half. However the
carrier's outlook is overshadowed by China's recent move to devalue
its currency amid a domestic economic slowdown. A weaker Chinese
yuan would increase the finance costs of the nation's major state
carriers which hold significant debt in dollars because of foreign
aircraft purchases.
In the first half, China Eastern carried 44.83 million
passengers, up 11% from a year earlier. Demand for outbound air
travel was particularly strong with the number of passengers it
carried on international routes rising nearly 31% during the
period, as more affluent Chinese travelled abroad. It carried
nearly 6 million passengers on long-haul international routes,
accounting for around 13% of its total passengers.
Separately, China Eastern said it agreed to buy 15 A330 aircraft
from Airbus Group (AIR.FR) as it seeks to boost its capacity to
meet the nation's strong air travel demand. The airline plans to
take delivery of the 15 aircraft with a list price of US$3.63
billion from 2017.
Write to Joanne Chiu at joanne.chiu@dowjones.com
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