Net profits of China's four major airlines surge due to oil price slump

An Air China Airbus A330 takes off from Beijing Capital International Airport. [Photo/Provided to China Daily]

The net profits of China's four major airlines surged due to a slump in international oil prices in the first half of 2015, even though revenues only increased slightly or even decreased, according to their financial reports published on Friday.

The reports show that in the first half of this year, Air China's net profit was 3.92 billion yuan ($615 million), 7.3 times of that of last year; the net profit of China Southern Airlines had a year-on-year growth of 442 percent to 3.48 billion yuan; the net profit of Hainan Airlines showed a year-on-year growth of 232 percent to 1.6 billion yuan and the net profit of China Eastern Airlines dramatically increased by 237 times to 3.56 billion yuan.

Aviation fuel is the main cost for airlines. The reports show that the main reason for the surge of net profits is the plummeting cost for fuel. In the first half of 2015, Air China spent 12 billion yuan on fuel, down 5.3 billion yuan year-on-year. The spending only accounted for 30 percent of its main costs, and the figure was 41 percent in 2014.

Insiders and analysts are positive about these airlines' performance in the future. "The demand in August is still huge, and the net profits of airlines are likely to continually increase in the fourth quarter."