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Air China posts strongest quarter this year
October 30, 2012 / 4:01 PM / 5 years ago

Air China posts strongest quarter this year

HONG KONG, Oct 30 (Reuters) - Air China Ltd, the country’s flagship airline, posted its strongest quarterly profit for the year, although down 16 percent on the year, as fuel prices retreated and foreign exchange losses narrowed.

However, the carrier said the aviation industry still faced the challenges of high fuel prices and weak demand.

Beijing-based Air China said it made a net profit of 3.2 billion yuan ($512.52 million) for the three months ended September, in line with an average forecast of 3.2 billion yuan in a Reuters poll of six analysts.

That figure compared with a net profit of 3.8 billion yuan a year ago. The results were based on Chinese accounting standards.

A weak global economy has hit international airlines since last year, with travellers postponing or cancelling trips, but demand in Asia, especially China, has held up well.

Air China’s revenue passenger kilometers (RPK) rose 5.3 percent in July through September.

A stronger Chinese yuan, which has returned to a rising trend against the U.S. dollar since late July, is positive for Chinese airlines which generate most of their income in yuan while their borrowings are mainly in the dollar.

As Asia’s second-largest airline by market value, Air China outperformed many international carriers in the region, such as Cathay Pacific Airways Ltd and Qantas Airways Ltd , both of which are loss-making.

For the first nine months, Air China’s net profit fell 46 percent to 4.2 billion yuan. But the airline’s third quarter profit drop was the lowest among the big three Chinese carriers.

Its domestic rivals, China Southern Airlines Co Ltd

and China Eastern Airlines Corp Ltd , reported a 29 percent and 20 percent net profit fall in the third quarter respectively.

Air China’s Hong Kong-listed stock is down 4 percent this year, lagging an 16 percent gain on the benchmark Hang Seng Index.

The stock closed up 0.4 percent on Tuesday, before the earnings announcement. ($1 = 6.2436 Chinese yuan) (Reporting by Alison Leung; Editing by Matt Driskill)

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