Hainan interested in airBaltic; China Airlines revenue soars 45% in Aug-2010; tipped to join SkyTeam

Shares in Air China increased 1.7%, with China Southern, China Eastern Airlines and Hainan Airlines also stronger, gaining 1.8%, 1.9% and 2.1%, respectively, yesterday. It reflected overall strength in the market, as economic data showed evidence of strengthening domestic demand and the yuan advanced to a record high, its highest since a peg against the USD was eliminated in Jul-2005.

China's economy in 'good shape' and will drive global recovery: Wen

Separately, China's Premier, Wen Jiabao, stated China's growth will drive a global economic recovery, adding that the Chinese economy is in "good shape", with "fast growth, gradual structural improvement, rising employment and basic price stability".

Meanwhile, Latvian TV3 show Neka personiga (Nothing Personal) has reported that Hainan Airlines is interested in acquiring shares in airBaltic, with talks reportedly centring around the possibility of the sale of a 48% stake in the airline.

The Latvian Government would be left with a 4.7% stake in the carrier, with the remaining shares to remain in the possession of airBaltic President Bertolt Flick. It has been reported that if the ownership structure is altered, there could be a change in the airline's name.

Airbus in talks to sell 150 aircraft to China

Also in the Chinese market, La Tribune has reported that Airbus is in talks with Chinese authorities for an order for 150 aircraft (including 130 A320s, 20 A330s and 10 A350s) worth USD15 billion at catalogue prices.

It has been reported the order could be signed during the visit of the Chinese President to France in Nov-2010. An MoU has reportedly already been signed for the A350 purchase although it has not yet been converted into a firm order. Including options, the order could reach 200 aircraft, including A380s.

China Airlines' operating revenue up 45% in Aug-2010

In other North Asian news, China Airlines reported double-digit operating revenue growth across the board in Aug-2010,  with revenues reaching USD390 million (+45.2%). Passenger revenue gained 33% to USD230 million, with cargo revenues soaring 76% to USD144.2 million and "other" revenues increasing 13% to USD15 million. Passenger traffic (RPKs) however declined 0.5% (although freight traffic increased 22%), while passenger load factors strengthened slightly (+0.7 ppts to 84.1%, while cargo load factors decreased 2.1 ppts to 68.4%).

China Airlines tipped to join Skyteam

In other China Airlines news, the Taiwan carrier is poised to join the SkyTeam airline alliance, with the carrier holding what is described as a "landmark event" in its 50-year history today (14-Sep-2010). With the prospective entry of China Airlines, SkyTeam will have four Asian members, consisting of co-founder Korean Air, China Southern Airlines and the most recent arrival, Vietnam Airlines.

Asia Pacific selected airlines daily share price movements (% change): 13-Sep-2010