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Air China profits decline on rising fuel costs; international passengers and cargo weakness

Air China reported a 12% reduction in first half (six months to 30-Jun-2011) net profit to CNY4.06 billion (USD634 million) amid "continuous depression of western economy,” “unstable political situation in North Africa” and “surging fuel prices.” The increased cost base, driven by the higher fuel costs, offset a double-digit increase in revenues, which was boosted by steadily increasing domestic market demand. Air China's weaker first-half profit contrasts with competitor China Southern Airlines, which reported a 33% gain in first-half net profit to CNY2.76 billion on strong demand for air travel.

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