Air China Ltd, China's flagship airline, said on Wednesday its 2015 net profit jumped 77.5 percent, boosted by record low fuel prices and robust leisure and business travel demand. Net profit was 6.8 billion yuan ($1 billion), up from 3.8 billion yuan a year earlier, in line with its own forecast but lagging the 8.3 billion yuan consensus from 15 analysts polled by Reuters SmartEstimate.
Air China's fuel bill, which accounts for about 40 percent of its operating costs, fell 30.4 percent from the year-ago level. However, it booked a 5.2 billion yuan ($803 million) foreign exchange loss, due to a weakening yuan. The after-tax profit of its cargo joint venture with Cathay Pacific Airways also dropped 87.7 percent from a year ago.
Air China had the highest total debt in the world, Thomson Reuters statistic show. For 2014, its total debt was $18.6 billion, compared with $20.8 billion at American Airlines Group Inc. The airline, like many Chinese peers, abandoned advance hedging to cover variations in fuel costs after being hit by wrong-way bets late in 2009. As a result, these carriers reap the full benefit when oil prices slide.
China Eastern Airlines' 2015 net profit rose 32.9 percent to 4.5 billion yuan, while China Southern Airlines' net profit for the year rose 117 percent to 3.9 billion yuan, according to stock exchange filings. The carrier's performance was also helped by the number of Chinese tourists going overseas, which topped 100 million in 2014 for the first time. Foreign travel is tipped to grow another 10 percent this year as destinations such as the United States, France and Australia and, mostly recently, Britain ease visa policies. A bigger contribution from its 30 percent-owned partner airline Cathay Pacific Airways also helped earnings. Air China's Shanghai-traded shares rose 2.71 percent ahead of its earnings on Wednesday, lagging a 2.76 percent gain of the benchmark index.
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