Air China claims to be unaffected by China Aviation Oil's collapse

Airline Industry Information, Dec 2, 2004

AIRLINE INDUSTRY INFORMATION-(C)1997-2004 M2 COMMUNICATIONS LTD

Air China has said that it has been unaffected by the collapse of its jet fuel supply company China Aviation Oil which supplies the majority of jet fuel in China.

China Aviation Oil has sought protection from its creditors after collapsing under the weight of USD550m of trading losses on oil futures. Air China buys 70% of the jet fuel in China and is in the process of marketing a USD1.1bn initial public offering.

Airlines in China have historically paid a 60-70% domestic premium on fuel due to the virtual monopoly that China Aviation Oil had on the market. Air China said that it was looking to hedge 30-50% of its jet fuel in 2005, up from 24% in 2004, reports Reuters.

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