-- Operating revenue grew 14.2% y-o-y to RMB51.33 billion
-- Net profit attributable to shareholders grew 57.3% y-o-y to RMB4.23
billion
-- Basic earnings per share grew 34% to RMB35.6 cents
-- Recommended year-end dividend was RMB0.0684 per share
HONG KONG, March 24 /Xinhua-PRNewswire/ -- Air China Limited (“Air China” or “the Company,” together with its subsidiaries, collectively “the Group”) (HKEx: 753; LSE: AIRC; SSE: 601111; ADR OTC: AIRYY), China’s national flag carrier, today announced its financial results for the twelve months ended December 31, 2007 (“the Period”).
(Logo: http://www.prnasia.com/sa/200708081141.jpg )
Financial Highlights
In fiscal year 2007, according to International Financial Reporting Standards (“IFRS”), the Company’s operating revenue increased by 14.2% to RMB51.33 billion from RMB44.94 billion in 2006. This increase was primarily attributed to the continued solid growth of passenger and cargo services. Passenger and cargo revenue saw a 14.7% increase to RMB47.7 billion, from RMB41.6 billion in 2006. The growth in revenue was a combined result of improvements in capacity and load factor.
Total operating expenses increased by 12% to RMB47.5 billion from RMB42.4 billion in 2006, which was primarily attributed to the increase in fuel prices and consumption. Against the backdrop of high and volatile oil prices, total fuel costs of RMB17.2 billion, accounted for 36% of total operating expenses, against 37% in 2006. The increase in fuel costs was partially offset by hedging, which helped reduce fuel expenses by RMB236 million.
Net profit attributable to shareholders grew 57.3% to RMB4.23 billion from RMB2.69 billion in 2006.
Basic earnings per share increased 33.8% to RMB35.6 cents, against RMB26.2 cents in 2006.
The Board of Directors recommended a final dividend per share of 6.84 cents, against RMB4.92 cents in 2006.
Operational and Business Highlights
Passenger Service
For the 2007 fiscal year, the total number of passengers carried by the Company increased 10.59% to 34.84 million from 31.5 million in 2006, driving related revenue up from RMB37.6 billion in 2006 to RMB43.6 billion. Passenger load factor improved to 78.6% from 75.9% in 2006. Revenue passenger kilometers (“RPK”) reached 67 billion, an increase of 11.07% over 2006. International RPK was 28.4 billion, up 12.06% y-o-y and domestic RPK of 36.5 billion represented an increase of 10.81%.
In the period, the total number of passengers carried by Air Macau decreased 2.1% to 2.42 million from 2.47 million in 2006. Passenger load factor improved to 76.35% from 75.04% in 2006, while passenger traffic measured by RPK was 3.0 billion, a minor decrease of 0.4% from 2006.
Hub Strategy and Route Expansion
A well executed hub strategy was a major contributor to the Company’s strong revenue and profit growth. In 2007, the Company continued to increase capacity allocation to its hubs. The total number of aircraft assigned to the Company’s Beijing, Chengdu and Shanghai base were 132, 39 and 31 respectively, representing passenger throughput market share of 44%, 36% and 12%. This has helped to increase the number of connecting flights, which led to more transfer passenger traffic.
The Company has also expanded its route network with five new international routes including Beijing to Sapporo and to Athens as well as a group of domestic routes. Currently, the Company operates a total of 280 routes, which includes 201 domestic routes, 72 international routes and 7 regional routes, reaching 121 cities across 27 countries.
Fleet Upgrade and Service Enhancement
In fiscal year 2007, Air China introduced 29 new aircraft into service. Presently, the Company (excluding Air Macau) operates a fleet of 220 aircraft. The average aircraft age is 7.3 years.
In an effort to raise service quality, the Company continued to improve its in-flight products and services, with greater emphasis on enhancing the overall customer experience for the premier passengers. During the period, the Company has completed renovation work on new business class and first class cabins and deployed new aircraft equipped with newly designed seats, offering enhanced comfort.
Alliances and Partnerships
The Company officially joined the Star Alliance in December 2007. Star Alliance, the largest airline alliance, covers a network of 155 countries and regions and 855 destinations. Joining the Alliance will enable the Company to further extend its global reach by connecting its network with that of the Star Alliance.
In late March 2008, the Company will move to the new terminal in the Beijing International Airport. This will allow the Company and other members of the Star Alliance to operate “Under One Roof,” enabling them to better facilitate passengers’ connections between flights.
In 2007, the Company also continued to build its strategic relationship with Cathay Pacific Airways Limited. During the reporting period, the Company and Cathay commenced joint route operations between Beijing and Hong Kong. The Company and Cathay have also completed the integration of their sales and marketing departments in mainland China and Hong Kong, Macao and Taiwan and have put in place a periodical capacity coordination system.
Currently, the Company has established partnerships with 138 airlines under the MITA framework and maintained bilateral partnership with 50 airlines. Air China has also built special corporate schemes with 103 airlines and close code-share partnerships with 20 airlines.
2008 Olympics Games
As the sole airline partner of the Olympic Games, the Company has launched a full range of marketing and service initiatives to further enhance the Company’s profile and recognition of the brand in the international community.
Cargo Service
During the period, cargo service saw a 1% minor increase in revenue to RMB 4.085 billion, against RMB 4.041 billion in 2006. Cargo traffic experienced growth of 11.44% to RMB3.88 billion Revenue Freight Ton Kilometers (“RFTK”) in 2007. Cargo capacity, measured by Available Freight Ton Kilometers (“AFTK”), increased 7.2% to 6.9 billion. The cargo and mail load factor was 56.43%, an increase of 2.13 percentage points.
Outlook
Mr. Kong Dong, Acting Chairman of Air China commented, “We have achieved another year of outstanding results in 2007. Over the years, Air China has established a track record of outstanding performance, a focused strategy and a solid operational foundation.”
“Looking into 2008, Air China is well positioned to capture the tremendous opportunities presented by the coming Olympic Games and the continued rapid economic growth in China. In order to maintain our leadership position in the domestic market and to increase our competitiveness, it is crucial to adjust our corporate strategy on a timely basis. To this end, the Company has re-aligned our strategic goals to face and overcome future challenges. Our goals are: to enhance our competitive strength internationally; to continue to improve our development capability; to offer a more unique customer experience; and to achieve sustainable long-term growth. With the support of our shareholders and the hard work of our entire Company, we will continue to improve the quality of our services. Through 2008 and beyond, we also intend to enhance our profit mix and tighten our cost controls. I am confident that Air China will continue to generate greater returns for shareholders,” Mr. Kong said.
Notice
Air China Limited announces their fiscal year 2007 results on March 17, 2008. Results will be published in the South China Morning Post and the Hong Kong Economic Times on March 18, 2008. An archived webcast of the discussion of Air China’s results will be posted on March 19, 2008 on the Company’s website at http://www.airchina.com.cn .
About Air China Limited
Air China Limited (Air China) is the national flag carrier of China and a leading provider of air passenger, air cargo and airline-related services in China. Its operational head office is in Beijing. The Company’s extensive route network serves major Chinese cities and international destinations, with dominant market share measured by total traffic volume for the Beijing Capital International Airport. It also provides airline-related services, including aircraft maintenance, ground services and in-flight catering services in Beijing, Chengdu, Hong Kong and other locations through its own business units and joint ventures. As of December 31, 2007, the Group operated a fleet of 220 aircraft，serving 121 destinations. Air China was listed on the Hong Kong Stock Exchange and the London Stock Exchange on December 15, 2004 under codes 0753 and AIRC respectively. On August 18, 2006, Air China was listed on the Shanghai Stock Exchange under code 601111. On August 4, 2004, Air China was designated as the sole official passenger airline partner of the Beijing Olympic Games. For further details, please visit Air China’s website: http://www.airchina.com.cn .
Safe Harbor Statement
This press release contains projections and forward-looking statements that reflect the company’s current views with respect to future events and financial performance. These views are based on current assumptions which are subject to various risks and which may change over time. No assurance can be given that future events will occur that projections will be achieved, or that the company’s assumptions are correct. Actual results may differ materially from those projected.
