Price competition and fuel costs put Shanghai Airlines into loss

SHANGHAI Airlines has announced that it has made a CNY435.1 million (US$62 million) net loss in 2007, compared with a profit of CNY9.3 million the previous year despite last year's revenues rising 23 per cent to CNY12.3 billion.

Despite robust traffic growth, the regional carrier said price competition and high fuel costs were its undoing as it also lost money on its new Hong Kong route, while CNY90 million in other losses piled up from its new international air cargo unit.

"The company faced tight resource constraints during the period, especially for pilots and engineers, which limited the expansion of its business," said a company statement.

The airlines said fuel costs and fierce competition would continue in 2008, but added that it hoped to improve earnings by increasing efficiency and sales during the Olympics Games this summer.