Business / Companies

Air China's net profit declines

By Wang Wen (China Daily) Updated: 2014-03-27 08:33

Air China Ltd, the flag carrier of China, saw a 32.41 percent year-on-year reduction in its net profit in 2013, and this year may be tougher for Chinese carriers, analysts forecast.

Air China earned 3.3 billion yuan ($535 million) net profit and operation revenue of 97.63 billion yuan - a 2.22 percent decline - in 2013, according to the carrier's annual report released on Wednesday.

It is the third consecutive year that the carrier has reported reduced profits. The decline was attributed to China's slowed economic growth, the global economic recession and a weak cargo market.

Air China's passenger yield decreased by 10.39 percent to 0.62 yuan in 2013, which directly led to the profit decline, although both passenger numbers and load volume increased slightly in 2013.

Chen Xin, an analyst with UBS Securities LLC, estimated the airline's ticket price dropped about 8 percent in 2013 from the previous year.

In addition, because of anti-corruption regulations released by the central government, high-end demand for air traffic decreased in 2013.

Air China said in its report that the sales of its business and first-class seats increased only 7 percent in 2013 from 2012, but the rise had been over 10 percent in past years, analysts said.

"Other Chinese carriers also met the same problem as Air China, and their business will not be any better than Air China's," said Li Lei, a civil aviation analyst with China Minzu Securities Co.