Air China Ltd's 2006 profits rose 11.7 percent on strong passenger traffic despite high jet fuel prices, the Chinese mainland airline said today, according to The Associated Press.

 

Net profit for the 12 months ending December 31 rose to 2.7 billion yuan (US$347 million), said Beijing-based Air China, one of China's three main government-owned airlines.

 

Revenues rose 17.4 percent to 44.9 billion yuan, driven by a 15.5 percent surge in passenger traffic, the airline said. But it said expenses rose even faster, jumping 22.5 percent due to high fuel prices.

 

"We saw a break in the high global oil prices in the second half of the year, which helped bring some relief to the most significant cost pressure we have been facing," said chairman Li Jiaxiang in a statement. "As a result, we were able to post a substantial increase in earnings and reward our shareholders with a year-end dividend."

 

The company, which is listed on the Hong Kong stock exchange, did not release fourth-quarter results.

 

Air China and its main competitors, China Eastern Airlines Ltd and China Southern Airlines Ltd, have been hit hard by fuel costs. All reported heavy losses for the first half of 2006.

 

Government regulations limit Chinese airlines' ability to pass on fuel costs to passengers. Air China is believed to benefit from its greater international traffic, which brings in higher-paying passengers and allows it to buy fuel abroad at lower prices.

 

Air China expanded in 2006, adding 35 routes and service to Vietnam, India, Spain and Brazil.

 

The carrier signed an agreement last May expressing its intent to join the Star Alliance, an airline group that includes United Airlines and Germany's Lufthansa. It also introduced code sharing arrangements with Brazil's Varig, Australia's Qantas and Air New Zealand.

 

 

(Shanghai Daily March 20, 2007)