Airline Finance News - Asia / Pacific

AirGuide Business, May 5, 2008

May 5, 2008

Foreign arrivals into China (PRC) will grow between 12 percent and 15 percent per year over the next three years, mostly into the eastern and south eastern regions of the mainland, PATA Vice President Michael Yates told a gathering of more than 200 international and local mayors in Zhengzhou, China, last week. Citing PATA forecasts, Yates said foreign (non-Chinese) visitors will account for 25 million of the 67 million inbound visitors by 2010. Yates also gave a snapshot view of a new PATA report, Realizing China's Tourism Potential, which will officially launch in Beijing next month. The report was developed with the support of CNTA and is sponsored by Visa International. Apr 28, 2008

Air New Zealand

Air New Zealand said on Wednesday it will lift domestic fares by an average 3 percent due to record high fuel prices. Air New Z last lifted domestic fares by 3 percent in March but said another rise was necessary because it could not absorb the surging cost of fuel Singapore jet fuel has risen over 10 percent to USD$144 per barrel since mid-March, reflecting the rise in global oil prices. The announcement comes a week after the company lowered its full-year operating profit forecast by up to 25 percent because of higher oil prices. Shares in Air NZ, 77 percent owned by the New Zealand government, last traded up 2.5 percent at NZD$1.24 after trading between NZD$1.13 and NZD$3.13 over the past 12 months. In January, the airline cut domestic fares by up to 30 percent to increase passenger numbers. It has also introduced bigger planes that are cheaper to operate. Air NZ is facing increased competition in the domestic market, which it dominates, from Australian carriers Qantas Airways and Virgin Blue. It has said its fuel bill was 80 percent hedged for the rest of the financial year but even with hedging and higher fares it could not insulate itself against the widening gap between crude oil and jet fuel. Apr 30, 2008

Air New Zealand

Air New Zealand said it will miss its full-year earnings target owing to "continued increases in the price of jet fuel." It said in February when releasing its half-year earnings that it expected to improve on its full-fiscal-year earnings before taxation and unusual items, but now it "will not achieve this outcome." Based on projected fuel costs and "the current demand environment," it is targeting NZ$200-NZ$220 million ($158.4-$174.2 million) in normalized earnings for the year ending June 30. March passenger numbers rose 4.5% year-over-year and yield fell 0.5%. Apr 28, 2008

China Eastern Airlines

China Eastern Airlines reported net income of CNY210.8 million ($30.1 million), up 142.9% from the CNY86.8 million earned in the year-ago quarter. Revenue rose 14.2% to CNY10.6 billion. China Eastern's bottom line will take a hit owing to the loss of two routes from Kunming following work actions by pilots. According to a company statement cited by Reuters, it expects to lose CNY405 million in revenue this year. The suspended flights accounted for 1.5% of its 2007 sales, Reuters said. Apr 30, 2008

China Southern Airlines

China Southern Airlines expects to open 7-8 new international routes this year, expanding on a plan that saw it open 10 new foreign destinations in 2007. This year's routes will originate mostly in Guangzhou and serve neighboring countries in Southeast Asia, in addition to a London flight scheduled to start in the fourth quarter, Chairman Liu Shaoyang said. China Southern aims to increase the percentage of its revenue derived from international operations from the current 19% to 25%-30% in the next five years while expanding its fleet from 332 aircraft at Dec. 31, 2007, to 400 by 2010. Apr 29, 2008

China Southern Airlines

China Southern Airlines said domestic consolidation likely is necessary to maximize international competitiveness. He said Beijing is considering a reorganization of the domestic airline industry but a decision will not be made this year as carriers concentrate on August's Olympic Games. Last month he proposed a China Air Holding Co. that would hold stakes in China Southern Airlines, Air China and China Eastern Airlines. It is scheduled to enter effect this year. Apr 29, 2008

Hainan Airlines

Hainan Airlines increased earnings nearly fivefold in the quarter, reporting a CNY286.7 million profit compared to CNY51.2 million in the same period last year. Operating revenue grew 3.5% to CNY3.57 billion against a 0.9% rise in operating costs to CNY2.74 billion. Apr 30, 2008

Korean Air Lines

Korean Air announced a swing to a larger-than-expected quarterly net loss on Wednesday, pressured by higher fuel costs and a softer won currency. Korean Air faces unfriendly skies this year due to ever-rising fuel prices and a slowing global economy, although the company can partially soften the impact with surcharges. The company is also struggling against intensified competition from budget carriers, especially Chinese airlines, analysts say. Since January, South Korea has allowed Korean Air to more than double its fuel surcharges for international flights. Apr 30, 2008