As China's economic growth slows, its airlines maintain optimistic to bullish growth

Even though China's economic growth in the second quarter slowed from 9.6% in 2011 to 7.6% in 2012, Chinese carriers are maintaining an optimistic to bullish growth forecast as they take, like many companies and government initiatives in China, a long-term view of their potential. That outlook calls for growth in the short-term to raise brand awareness, especially internationally, and increase travel propensity, which has economic flow-on affects. When economic times are right, and the carriers are sophisticated enough to do so, there will be a sizeable market to profit from.

The implications of that in the short-term are the recent warnings by Air China, China Eastern and China Southern, the country's three biggest carriers, of 1H2012 profits declining by over 50%. In a positive outlook, Jun-2012 profits are up following a decrease in fuel prices. Both carriers recently announced plans to collectively take 30 widebody Boeing 777-300ER aircraft and, amongst other Chinese carriers, are pursuing short- and long-haul international expansion. Already in 1H2012 Chinese carriers transported 8.7% more passengers than in 1H2011.