Growth rate likely to narrow in rest of year: analyst
Thanks to the "One Belt and One Road" (B&R) initiative, a stable yuan and low international oil prices, China's major -airlines reported sound performance in the first three quarters of 2016, with their combined net income exceeding the full-year figure of 2015.
The combined net income of three major airlines, Air China, China Eastern Airlines Corp and China Southern Airlines Co, soared by more than 15 percent in the first nine months, surpassing their total net income in 2015.
Air China's net income reached 7.22 billion yuan ($1.07 billion) in the first three quarters of this year, compared with 6.77 billion yuan in 2015.
China Southern reported net profit of 6.4 billion yuan for the first three quarters of 2016, far above the full-year record of 3.85 billion yuan in 2015.
Meanwhile, China Eastern's net profit jumped 25 percent year-on-year to 6.69 billion yuan.
The sound performance of the three major airlines primarily resulted from the "B&R initiative", low international oil prices and strong market demand, analysts noted.
"The 'B&R initiative' contributes to trade and pushes people to fly between China and other countries, which boost demand for flights," Wu Minghua, a Shanghai-based independent shipping industry analyst, told the Global Times on Thursday.
In the first three quarters of 2016, the combined revenue of the three major State-owned airlines grew by less than 5 percent, data from the companies' financial reports showed in October.
China Southern reported the highest revenue for the period - 86.7 billion yuan - up 1.52 percent year-on-year, followed by Air China's revenue of 85.4 billion yuan, up 3.72 percent from the same period in 2015.
But China Eastern's revenue grew at the fastest rate of 4.79 percent year-on-year, reaching 75.41 billion yuan.
Peak demand in tourism and the need to export large quantities of goods for the upcoming Christmas season also drove the airlines' income growth, Wu said.
According to a report released by the China Tourism Academy in September, the number of Chinese tourists was 790 million in July and August.
The organization estimated the number hit 810 million in September and October.
Air China said in its third-quarter financial report that international oil prices remain low, which also helped the airline's bottom line.
In the first three quarters of 2016, international crude oil price averaged $41.03 per barrel, a drop of 19.3 percent year-on-year, according to data from the New York Mercantile Exchange, media reports said.
The stable yuan curtailed the airlines' foreign exchange losses, helping them cut expenses, domestic news outlet jiemian.com reported on Tuesday.
In the first nine months of 2016, Air China, China Southern and China Eastern reported that their financial costs decreased by 18.1 percent, 33.4 percent and 20.3 percent, respectively.
However, Wu forecast that domestic airlines' net income growth will narrow as market demand has already showed signs of declining in the fourth quarter.
In addition, the benefits of the stable yuan and low crude oil prices might disappear.
