Air China

Air China is China’s largest airline operating a fleet of over 200 Boeing and Airbus craft to more than 250 domestic and international destinations. No other airline offers so many flights to the Chinese capital Beijing, or onward flights to regional points in China. The airline’s main operations hubs are located in Beijing, Shanghai, and the western Chinese city of Chengdu.

Air China is largely state owned (approximately 66%), through the China National Aviation Holding Company. The airline is the only one to carry the PR China flag on all the aircraft in its fleet. The company was established on 1st July 1988 and has grown exponentially since then flying 33.97 million passengers in 2006 alone.

Although Air China has grown massively it has faced some recent setbacks. Compared to previous years 2006 was disappointing for Air China and many other airlines troubled by the rising cost of jet fuel. The Citigroup predicted profits for the airline of 3.2 billion Yuan ($413 million) for 2006. However, actual profits were 16% lower than this at 2.7 billion Yuan ($344.6 million). This was due to an unexpected rise in operational costs by 22.5%, the largest contribution to this amount coming from the dramatic increase in the cost of jet fuel. Air China’s spending on fuel surged 33.4% to 15.7 billion Yuan. Nevertheless, airline’s profits for 2006 were up 11.7% on 2005. However, this was primarily the result of the sale of the airline’s stake in Hong Kong based airline Dragonair, from which Air China received 3.2 billion Yuan ($413 million).

Despite a frustrating financial year for Air China in 2006 the future is not bleak for the company. Through investment in staff and service development programmes the airline hopes to ensure its status as a world player in the aviation industry. The airline also plans to modernise some of its ageing fleet having placed orders for the new Boeing ‘Dreamliner’ B787. Air China has also recently acquired a 17.5% stake in Cathay Pacific and together they hope to set up a cargo venture operating out of Shanghai.

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