March 27, 2018 / 10:24 AM / a year ago

Air China's full-year profit hits highest since 2011 on cargo demand

SHANGHAI, March 27 (Reuters) - Air China Ltd on Tuesday posted its strongest profit since 2011, albeit missing analyst forecasts, as a buoyant cargo market and strengthening yuan helped boost earnings.

China’s flag carrier said 2017 profit attributable to shareholders rose 6.3 percent from a year earlier to 7.24 billion yuan ($1.15 billion). That compared with the 9.22 billion yuan average of 17 analyst estimates in a Thomson Reuters poll. Revenue rose 7.7 percent to 121.4 billion yuan.

Passenger yields fell 0.45 percent to 0.53 yuan per revenue passenger as its passenger capacity grew by 6.3 percent over the year. Revenue from cargo operations, which have benefited from a global recovery in demand, jumped 23.5 percent.

The airline also said fuel costs jumped 29.2 percent to 6.42 billion yuan, though it booked 2.94 billion yuan in foreign exchange gains as the yuan has gained about 10 percent against the U.S. dollar since the start of 2017.

Air China and its main rivals have taken out many dollar-denominated loans to buy aircraft, so the strengthening of the yuan has helped them cut finance costs.

The carrier did not comment on how its results had been impacted by Cathay Pacific Airways Ltd, of which Air China holds a 30 percent stake through cross-shareholding, after the Hong Kong carrier reported its biggest annual loss in nine years earlier this month.

Rival China Southern Airlines Co Ltd on Monday posted a 17 percent jump in profit. China Eastern Airlines Corp Ltd is expected to report its results later in the week. ($1 = 6.2795 Chinese yuan renminbi)

Reporting by Brenda Goh Editing by Christopher Cushing

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