North Asia Airlines Earnings Wrap

Air China, China Eastern, China Southern, Shandong Airlines, Hainan Airlines and ANA were all profitable in the three months ended Sep-2009, although Shanghai Airlines remained in the red in the period and ANA now expects a full year loss in the 12 months ended Mar-2010. Meanwhile, Taiwan’s carriers, China Airlines and EVA Airways reported narrowed losses in the nine months ended Sep-2009.

ANA profitable in 2Q2010, but swings to a loss in 1H2009 

All Nippon Airways (ANA), Asia’s second largest carrier by revenues, reported a USD42.3 million net profit in 2Q2010, a 21% year-on-year increase and for a net profit margin of 1.1%, but swung to a net loss of USD281 million in 1H2010 (from a net profit of USD245 million in the previous corresponding period).

(NB ANA’s Japanese competitor, JAL, is scheduled to report its financial results for the period on 13-Nov-2009).

According to ANA, “although there were signs of a recovery in demand from August, with passenger numbers exceeding the previous year’s level, the overall number of passengers during the period under review was lower than the same period last year, due to the first quarter demand slowdown. Revenue per passenger also fell, in part because of a reduction in business class usage, pushing down sales below the previous year’s level”.

ANA operating profit margin and net profit margin

Also during the quarter, domestic passenger numbers remained depressed (-5.5% year-on-year to 11.2 million), while international passenger numbers were up, by 2.5% to 1.2 million, driven by stronger Sep-2009 traffic.

ANA international and domestic passenger number growth: Sep-2008 to Sep-2009

ANA downgrades FY2010 outlooks; losses expected to widen 

The carrier also forecast a second straight annual loss for the 12 months ended Mar-2010, as international passenger demand declined at its fastest level in six years, due to the negative effects of the global economic crises and the swine flu crisis.

The carrier expects to report a net loss of JPY28 billion (USD311 million) in the full year, compared to a previously expected net profit of USD33 million, and higher than the USD263 million reported in 2008.  The carrier expects revenues of USD14 billion in the period, a 7% reduction from previous expectations, and a 10.5% year-on-year reduction.

China Airline and EVA Airways report narrowed losses in nine months to Sep-2009; yield weakness a concern

China Airlines, Taiwan’s largest air carrier by revenue, and smaller rival, EVA Airways, both posted net losses for the January-September period, although the losses narrowed from 2008 levels due to reduced fuel prices.

EVA Air and China Airlines financial highlights for three months ended 30-Sep-2009  



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China Airlines

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The carriers’ were negatively affected by weak passenger traffic and depressed air cargo rates during the periods, which created yield pressures for both airlines (both carrier’s have reported double digit passenger and cargo yields in the past six months). However, on a positive note, China Airlines VP Finance, John Chang, stated that ''cross-strait direct flights helped in the third quarter”.

EVA Air passenger yield growth: Sep-2008 to Sep-2009

Air China passenger yield growth: Aug-2008 to Aug-2009

China Airlines net profit in the period narrowed to USD153 million in the nine months to Sep-2009, from USD282 million in the 2008 period, as revenues declined by 27% to USD2.2 billion.

China Airlines revenue (TWD; millions): 1Q07 to 3Q09

Meanwhile, EVA Airways’ net loss for the nine-month period narrowed to USD120 million, from a net loss of USD322 million in the corresponding period in 2008, with revenue down 27%.

EVA Air total revenue (TWD, million): 1Q07 to 3Q09

Shandong Airlines and Hainan Airlines profitable in 3Q2009; Shanghai Airlines suffers loss

Shandong Airlines and Hainan Airlines reported operating and net profits for the three months ended Sep-2009, compared to losses in the corresponding period in 2008 (Shandong Airlines reported a USD31 million operating profit and a USD23 million net profit, while Hainan Airlines reported a USD27 million operating profit and a USD26 million net profit). Shanghai Airlines, however, reported net and operating losses in the three-month period, of USD28 million and USD6 million, respectively.

Looking forward, Shandong Airlines stated it expects to report a profit of USD32-38 million in the full year, an increase of 172-220% year-on-year.

Shandong Airlines, Shanghai Airlines and Hainan Airlines financial highlights for three months ended 30-Sep-2009  (According to Chinese Accounting Standards)


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Big Three Chinese carriers swing to net profitability

Last week, China’s ‘Big 3’ airlines, China Southern, Air China and China Eastern all rebounded to net profitability in 3Q2009, as economic growth (which expanded by 8.9% in the quarter) prompted a rebound in domestic air travel demand. The results also make it likely for the three carriers to report full-year profits.

Of the five carriers, Air China reported the largest net profit of USD130 million, followed by China Southern with a USD42 million net profit, Hainan Airlines, Shandong Airlines and China Eastern

Air China, China Eastern and China Southern financial highlights for three months ended 30-Sep-2009 


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