Buoyed by oil dip, Hainan Air profit jumps 16pc

Bloomberg

Hainan Airlines Co., the biggest private airline in China, reported a 15.9 percent jump in full-year profit as cheaper oil prices drove down costs and passenger numbers increased.
Billionaire Chen Feng’s airline reported net income of 3 billion yuan ($460.6 million) last year compared with 2.6 billion yuan in 2014, the Haikou, Hainan-based company said in a Shanghai stock exchange statement Thursday. Revenue declined 2.3 percent to 35.2 billion yuan.
Fuel costs decreased nearly 32 percent while passenger traffic increased 8.4 percent as the cheapest oil in more than a decade, coupled with a no-hedging policy, helped carriers in China. Hainan Air’s overall passenger load factor reached 88.2 percent last year.
Hainan’s larger rivals, the three big state-owned airlines, are also set to report a boost in earnings next week, according to analysts’ estimates. Mainland carriers have been aggressively expanding their international offerings, and Hainan Air increased its long-haul capacity by 51 percent last year, according to Bloomberg Intelligence analyst John Mathai.

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Nationwide passenger traffic rose 11.4 percent last year to 440 million trips, according to the Chinese aviation administration, which has projected 485 million passenger trips this year. Chinese airlines now fly direct to 114 long-distance destinations, up 150 percent in the past five years, according to Boeing Co.
Hainan Air has started flights to Chicago and Seattle from Beijing, the hub of Air China Ltd. The airline also expanded its routes from Shanghai, the home of China Eastern Airlines Corp.
To meet the expansion and surge in travel demand, Hainan Air placed an order with Boeing last year for 30 787-9 Dreamliner planes valued at $7.7 billion. The carrier will take delivery of the first jet under this deal in 2021, adding to Hainan Air’s current Dreamliner fleet of 10. As of end-2015, it operated a mostly Boeing fleet of 202.
Hainan Air’s parent HNA Group is on an acquisition spree, having added a 24 percent stake in Brazil’s third-largest carrier by market share, Azul SA, last year and wrapping up its $7.6 billion takeover of jet lessor Avolon in January.
The group was founded in 1993 and its fortunes climbed after the resort island of Hainan –known as “China’s Hawaii” — was designated a province and a Special Economic Zone in 1988. Chen controls Hainan’s two main airports, as well as hotels and travel agencies in the province.
His company is also the biggest property developer in the provincial capital of Haikou.
Hainan Airlines Company Limited is an airline headquartered in Haikou, People’s Republic of China. It is the largest privately owned air transport company and the fourth largest airline in terms of fleet size in the People’s Republic of China.
It operates scheduled domestic and international services on 500 routes from Hainan and nine locations on the mainland, as well as charter services. Its main base is Haikou Meilan International Airport, with a hub at Beijing Capital International Airport and several focus cities.