* Q3 net 5.17 bln yuan ($773 mln) vs 885.3 mln year before
* Two analysts had on average forecast 1.1 billion
* Turnover up 77 percent to 24.8 billion yuan
* unspecified investment returns surge to 518.5 million
* Fuel surcharge hike offset impact of higher fuel price
(Adds analysts comment, details)
By Fang Yan and Ken Wills
BEIJING, Oct 28 Air China (601111.SS) (0753.HK) posted a near six-fold rise in third-quarter earnings on Thursday thanks to robust air travel demand in the world's second largest economy as well as a big jump in investment returns.
Leisure and business travel is expected to stay strong in the fourth quarter, while a collective hike in airlines' fuel surcharges would help offset a rise in fuel prices this week, industry observers say.
"The fuel price hike is ... not good news for airlines, but they have all raised their fuel surcharge accordingly," said Yu Jianjun, an analyst with Huatai Securities, speaking before the release of Air China's quarterly earnings.
"I expect Air China to maintain healthy earnings gains as long as there is no further upward swing in oil prices."
The country's flag carrier made 5.17 billion yuan ($773 million) in net profit in the third quarter compared with 885.3 million a year earlier. Two analysts polled by Reuters had on average forecast 1.1 billion yuan.
Turnover rose 77 percent to 24.8 billion yuan, while unspecified investment returns surged to 518.5 million yuan from 149.1 million.
The results came as other airlines also posted strong third-quarter figures. Germany's Lufthansa (LHAG.DE) said revenue reached a higher-than-expected 7.57 billion euros ($10.5 billion), while Finnair (FIA1S.HE) swung to an operating profit of 41.9 million euros, topping all forecasts. [ID:nLDE69R07Y] [ID:nLDE69R0A4]
Earlier in the year, Air China more than doubled its stake in Shenzhen Airlines to 51 percent, a move which also helped dress up its July-September results.
Industry observers shrugged off concerns that the end of the Shanghai World Expo on Oct. 31 might hurt Air China's passenger volumes. The Beijing-based carrier did not benefit as much from the event as its Shanghai-based peer China Eastern Airlines (600115.SS) (0670.HK), they said.
Air China signed a deal recently to buy four Boeing (BA.N) 777 aircraft, which could help further expand its long-haul routes. (Editing by Jacqueline Wong and David Holmes) ($1=6.657 Yuan) ($1=.7205 Euro)