Hainan Airlines sees 1H profit drop on poor subsidiary performance

Hainan Airlines reported a net profit of CNY1.2 billion ($17 million) for the 2017 first half, down 31% over net income of CNY1.7 billion for the same period last year.

According to a filing by the Shanghai Stock Exchange, Hainan’s subsidiary Tianjin Airlines saw a 42% profit decline to CNY84 million after operating expenses jumped 70.5% to CNY12 billion in the first quarter.

In February, Hainan Airlines completed the acquisition of a 48.2% stake in Tianjin Airlines, making Hainan the controlling stakeholder in the Tianjin-based carrier with an 87.3% stake.

Hainan Airlines’ 1H operating revenue jumped 50.2% to CNY28.5 billion while operating expenses increased 75.3% to CNY24.6 billion.

Passenger boardings grew 53.3% to 34.2 million with an average load factor of 86.7%, down 1.5 points over the year-ago period. Capacity rose 53% to 67.1 billion ASKs against an increase of 50.4% in passenger revenue to 58.2 billion RPKs. Cargo traffic volume rose 11.6% to 224,082 tonnes.

In the first half, Hainan accelerated its international expansion pace by opening five intercontinental routes, comprising Chongqing-Los Angeles, Chengdu-Los Angeles, Chongqing-Moscow, Tianjin-Moscow and Kunming-Moscow, as well as nine international routes to neighboring Asian countries.

As of June 30, the Haikou-based carrier introduced three Boeing 787-9s and expanded its fleet to 362 aircraft with an average fleet age of 4.6 years.