Source: Bloomberg News Author: 07/29/2009
Subject Concerned: Government Aircraft Opinion Airlines
China Southern Airlines Co., the nation's largest carrier, fell the most in almost four weeks in Hong Kong trading, after rival Spring Airlines said the government was "unlikely" to extend an industry-wide fee rebate.
China Southern dropped 4.5 percent, the biggest decline since July 2, to HK$2.74. Air China Ltd. fell 4.9 percent to HK$4.83, reversing a 6.3 percent gain.
The aviation regulator probably won't extend rebates from its airline-backed infrastructure fund into the second half because of a rebound in domestic traffic, Wang Zhenghua, Spring Airlines' chairman, said on July 29. The fund was due to make repayments totaling 4 billion yuan (US$586 million) in the year ended in June.
Ending the rebates "will largely erode airlines' gains in the second half," said Jack Xu, an analyst at Sinopac Securities Asia Ltd. in Shanghai. "Profit this year will be less than the market had expected."
China Southern was entitled to a refund of 663 million yuan from the CAAC Infrastructure Development Fund in the second half of 2008, according to its annual report.
China Eastern Airlines Corp., the nation's third-largest carrier, ended at HK$2.48.
Spring Airlines, the nation's only low-cost carrier, also plans to expand its all-Airbus SAS fleet to 100 planes from 13 by 2015, Wang said in Shanghai on July 29. The company plans to own 30 planes and lease 70, he added.