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Chinese airline shares gain on appreciating yuan; USD1.1bn profit for China’s aviation industry

Analysis

Chinese airline stocks jumped on hopes that an appreciating yuan would lower the cost of imported jet fuel.

Summary
  • Chinese airline stocks surged on hopes of lower imported jet fuel costs due to an appreciating yuan.
  • Air China's Shanghai-listed shares reached a two-year high, while China Southern Airlines' mainland shares rose by the day's limit.
  • Hainan Airlines and China Eastern also experienced significant gains in their stock prices.
  • China's aviation industry reported a profit of USD1.1 billion in September 2010, a substantial improvement from the previous year.
  • Chinese airlines handled 22.6 million passengers in September 2010, with strong growth in domestic, regional, and international passenger numbers.
  • ANA Group in North Asia witnessed a reduction in domestic passenger numbers but saw growth in international passenger numbers. Singapore Airlines experienced a slight reduction in passenger numbers and load factors.

Air China's Shanghai-listed shares surged 9.7% to a two-year high, while its Hong Kong shares added 0.9%. China Southern Airlines' mainland shares rose by the day's 10% limit, while its Hong Kong shares gained 6.3%. Meanwhile, Hainan Airlines also gained strongly, up 6.8% with China Eastern's Hong Kong shares increasing 1.8%.

Overall, China's stocks rose for a seventh day, capping the longest rally in 11 months while the yuan rose to the strongest level since 1993. Chinese carrier's were also helped in part by buy recommendations from UOB KayHian

Chinese aviation industry reports USD1.1bn profit in Sep-2010

Meanwhile, CAAC stated the nation's aviation industry reported a USD1,108 million profit in Sep-2010, a notable improvement from a USD69 million profit in Sep-2009, with airlines contributing USD999.8 million to the result (compared with a profit of USD15.5 million in Sep-2009) and airports reporting a profit of USD43.7 million (compared with slightly under USD100,000 in the previous corresponding period).

Chinese airlines handle 22.6m passengers in Sep-2010

Also in Sep-2010, the nation's airlines handled 22.6 million passengers, a 17.0% year-on-year increase, with domestic passenger increasing 16.0% to USD20.9 million. Regional and international passengers gained strongly in the month: regional passenger numbers increased 31% to 524,000 while international passenger numbers gained 31.6% to 1.7 million. Passenger load factors also gained strongly, strengthening 6.5 ppts to 80.9%.

ANA domestic pax weaker; international pax growth in Sep-2010

Also in North Asia and ANA Group reported a 1.3% reduction in domestic passenger numbers in Sep-2010 to 3.7 million with an average passenger load factor fo 70.5% (+1.5 ppts), while international passenger numbers strengthened 8.5% to slightly under 435,000 with an average load factor of 78.6% (-0.8 ppts).

Singapore Airlines witnesses passenger and load factor reductio

Also reporting traffic, Singapore Airlines witnessed a 1.1% passenger reduction in the moth to 1.3 million, with passenger load factors also weakening slightly, slipping 0.6 ppts to 80.3%.

Asia Pacific selected airlines daily share price movements (% change): 15-Oct-2010

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