Fuel Costs Siphon Profits at China's Biggest Airlines
Liu Jing | Xu Wei
DATE:  Sep 03 2018
/ SOURCE:  Yicai
Fuel Costs Siphon Profits at China's Biggest Airlines Fuel Costs Siphon Profits at China's Biggest Airlines

(Yicai Global) Aug. 31 -- China's three biggest air carriers received government investment in the first half, but only one of them bolstered profits as rising fuel costs ate into margins.

Air China was the only one to see profit increase, pulling in over 4 percent more than the same period last year, or CNY3.5 billion (USD512 million), according to its financial report. But its fellow high-fliers China Southern Airlines and China Eastern Airlines watched gains plummet 22.8 percent to CNY2.1 billion and 47 percent to CNY2.3 billion, their own financials show.

All three of the state-owned carriers cited jet fuel as their biggest cost. They spent around 25 percent more on fuel compared with last year, with the outlays making up around 30 percent of all expenditure. The trio also expressed concerns that international oil price volatility could greatly impact performance.

The threesome also received backing from China Securities Finance in the first half. The investor is a specialized securities institution set up by the Shanghai and Shenzhen Stock Exchanges and China Securities Depository and Clearing with consent from the State Council, China's cabinet. It was approved by China Securities Regulatory Commission and investment from the firm is generally seen as an official move by the government into a specific sector.

Editor: James Boynton

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Keywords:   Air China,China Eastern,China Southern,Airlines,China Securities Finance,Jet Fuel