Air China's - Orient Aviation

BUSINESS ROUND-UPAir China outperformsits major rivalsTwo of the three major state-runChinese carriers reported decliningperformances in the fiscal yearto December 31, 2005, attributing their performancesto rising fuel prices (25%) andincreased competition from new airlines.Air China, the Mainland’s flag carrier,was the only airline to report a profit– 2.41 billion yuan (US$298.4 million), forthe 12-month period, compared to 2.39 billionyuan for the previous year. Air Chinasaid it had benefited from an increase in theyuan during the year under review as well assome fuel hedging (12.3%). The flag carrierintends to hedge 30% of its fuel in 2006.In contrast, Shanghai-based ChinaEastern Airlines (CEA) announced a lossof 467.3 million yuan (US$58.3 million) forthe 2005 year compared with a profit of 320.1million yuan in the same period in 2004.CEA, which has said it would like tofind a strategic investor prepared to take upa 20% equity in the carrier, said fuel priceincreases of 39% were largely to blame forthe losses. China National Aviation Corp.,whose parent company China NationalAviation Holdings owns 66% of AirChina, saw its profit decline by 37.7% for thelatest fiscal year, to US$28.85 million fromUS$46.28 million in 2004, again because ofrising fuel prices.China Southern Air Holdings, China’slargest airline group, continued its 2004losing streak when it reported losses of 726million yuan for the 2005 year comparedwith a loss of only 3.47 million yuan in2004. China Southern Airlines announcedin March it would partially fund its new aircraftpurchases with a syndicated loan ofUS$400 million.ANA ups its2005 profit forecastAl l Nippon A i r ways A i rl i nesGroup has increased its net profitforecast for the fiscal year to March31, 2006 by Y7 billion to Y27 billion, a companystatement said In April (comparedto a profit of Y10 billion the previous 12months).The improved forecast was based onstronger than expected demand for the airline’ssuper seat premium services and anincrease in business class traffic on theJapan to Europe and U.S services.12 ORIENT AVIATION MAY 2006... but CAL, EVAprofits slashedAir China:stayed in theblack in 2005Both Taiwanese international carriers,China Airlines (CAL) andEVA Air have reported the highrisefuel prices of last year had severelyeroded their profits in the 12 months toDecember 31, 2005. CAL said its net profithad declined by almost 85%, to NT$645.2million (US$19.8 million) from NT$4.18million in the previous 12 months.EVA announced its net profit for the yearto last December 31, dropped by 59% toNT$1.33 billion compared to NT3.24 billionin the previous 12 months.An EVA company statement said fuel atthe carrier now consumed 40% of its operatingcosts while CAL said its fuel costs roseto 36% in the 2005 year compared to 29%of total operating costs in the previous 12months.Briefly . . .As part of its drastic re-structuring,Malaysia Airlines (MAS) hassecured US$1 billion in a 10-yearbond issue underwritten by MAS’s majorshareholder [and government holding company],Penerbangan Malaysia Bhd. Theissue was over-subscribed by US$1 million.MAS requires US$4 million to fund its turnaroundplan.In Singapore, Temasek Holdings PteLtd, a government investment arm, hasannounced it has sold its equity in QantasAirways for an estimated A$146.4 million(US$105.3 million), but it has retained itsinvestment in Singapore-based, but QantascontrolledJetstar Asia.COMPANY NEWSExtra HAESL workshopAfter a year of operating at fullcapacity, Hong Kong Aero EngineServices (HAESL) has announceda US$11 million expansion programme thatwill see it acquire 8,000 sq. metres of landon which to build an extra workshop nextto its existing facility in Tseung Kwan O,Hong Kong.“The expansion [to be completed byyear-end 2007] will enable HAESL toincrease its engine throughput by up to 25%,improve our workflow efficiencies and growour capacity to meet increasing demand forcomponent repairs,” said general manager,Richard Kendall.Last year HAESL, which handles thefull range of current Rolls-Royce Trent andRB211 engines, beefed up its componentrepair capabilities and overhauled 202 enginesas opposed to 190 in 2004. The company,jointly-owned by the Swire group’s HongKong Aircraft Engineering Co. (HAECO),Rolls-Royce and SIA Engineering, saw an18% increase in turnover.Its workforce expanded by 80 to 755 in2005 and will grow to 815 by December. Itscurrent 30,000 sq. metre facility includes a130,000 lb test cell. – Charles AndersonThales busy in ChinaThales, the France-headquarteredinternational electronics and systemsgroup, has commenced constructionof air navigation systems at 12Mainland Chinese airports and at HongKong International Airport.It also will install a training systemat the southwest training centre of theCivil Aviation Administration of China.The projects, won by Thales in 2005, arethe installation of 11 Doppler-VOR VHFOmnidirectional Radio Range Systems(DVOR) for en-route navigation, 20 distancemeasuring equipment systems (DME)for en-route and landing procedures andthree Instrument Landing Systems (ILS) atthe Mainland airports.In the last five years Thales has built theAir Traffic Control (ATC) system for China’seastern corridor, installed a Eurocat ATCmanagement system in Chengdu and constructedthe ATC system for the North, East,South Area Control Centres for China.