Passenger rise on Air China radar

AIR China Ltd, the country's biggest international carrier, aims to raise passenger numbers at least 15 percent next year as economic growth fuels demand for holidays and business trips.

The airline also expects to make a profit on overseas routes next year, Chairman Li Jiaxiang told reporters in Beijing late Thursday. The carrier will likely fly 35 million to 38 million travelers this year, he said.

Chinese airlines, led by Air China and China Southern Airlines Co, have boosted passenger numbers on domestic and international routes as rising wages make flights affordable to more people, Bloomberg News said. Air China's traffic next year will also be helped by the Beijing Olympics Games and the addition of services to Berlin, Istanbul and Warsaw, the first of 12 new overseas routes to be added during the next two years.

"With the Olympics coming, Air China will easily reach the volume target," said Ma Ying, an analyst at Haitong Securities Co in Shanghai. "Still, Air China has a long way to go to catch up with Lufthansa and other foreign rivals on international routes due to its limited network." Deutsche Lufthansa AG is Germany's biggest carrier.

Air China's parent is yet to decide how it will vote on Singapore Airlines Ltd's plan to buy a stake in China Eastern Airlines Corp, the country's third-largest carrier, Li said. The company owns 11 percent of China Eastern's Hong Kong-listed stock, or H shares.

"We should take a friendly approach to ensure the mutual and beneficial development of the parties concerned," Li said. "We may buy more H shares of China Eastern if we expect good investment returns."

Singapore Airlines and parent Temasek Holdings Pte agreed to buy a 24-percent stake in China Eastern for about US$918 million last month. The deal needs approval from two-thirds of minority investors.
 
Air China's parent and Cathay Pacific Airways Ltd, Hong Kong's largest carrier, considered making a counter-offer. The two scrapped the plan, Air China said in a September 22 statement without elaboration.

Air China plans to make a profit on European routes this year and to cut losses on flights to North America and Australia, Li said. It expects to make a profit on overseas routes overall next year, depending on fuel prices and other factors, he added.