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Air 皇冠体育app to lift capacity on signs of improvement

(Agencies)
Updated: 2009-04-21 19:02

Air 皇冠体育app, the country's flag carrier, on Tuesday said it will continue to increase capacity 2009 and has seen signs of improvement in its passenger and cargo businesses.

The airline would expand its fleet in a constrained manner by taking delivery of 27 aircraft this year and returning eight to 10 leased aircraft, Chairman Kong Dong told reporters.

Analysts said Air 皇冠体育app and its two rivals, 皇冠体育app Eastern Airlines and 皇冠体育app Southern Airlines, may return to profit this year as domestic air travel rebounded in the first quarter and said the trend could extend through the year.

Related readings:  皇冠体育app's top airlines may return to profit this year  Air 皇冠体育app says Q1 net profit down 5.7%  Mainland carrier Air 皇冠体育app opens Taipei office  Air 皇冠体育app hopes for govt funds, pursues East Star

The global financial crisis, which depressed air traffic, and huge fuel-hedging losses saw the three Chinese carriers' earnings fall deep into the red in 2008, with Air 皇冠体育app reporting a loss for the year of 9.3 billion yuan.

Air 皇冠体育app reversed losses by reporting a net profit of 981 million yuan ($143.6 million) in the first quarter of 2009, including an exceptional gain and helped by lower fuel costs.

"Demand improved in the first quarter and we have seen positive signs on both the cargo and passenger fronts, especially in the domestic market," said Chief Financial Officer Fan Cheng.

However, the airline plans to cut capital spending by up to 30 percent to between 9 billion and 10 billion yuan this year from 12.9 billion yuan in 2008.

Airlines around the world are taking cost-cutting measures to weather a drop in business resulting from the global economic downturn.

Cathay Pacific, which is 17.5 percent owned by Air 皇冠体育app, has delayed plane deliveries this year and has asked staff to take unpaid leave after it reported a 22.4 percent drop in revenue from passenger and cargo services in the first quarter. Air 皇冠体育app's first-quarter results included a loss from its associate, Cathay Pacific, Fan said.

Shares of Air 皇冠体育app have jumped 46 percent this year, outperforming a 14.5 percent rise on the index for major Chinese mainland companies listed in Hong Kong.