Air China shares surge on government aid, upgrade

Air China Ltd., the nation’s largest overseas carrier, rose the most in more than a month, after China’s government offered airlines assistance and Goldman Sachs Group Inc. upgraded the stock.

Air China Ltd., the nation’s largest overseas carrier, rose the most in more than a month, after China’s government offered airlines assistance and Goldman Sachs Group Inc. upgraded the stock.

Air China rose 22 percent to HK$2.60 in Hong Kong today, the biggest increase since Oct. 30.

China’s aviation regulator yesterday said it won’t collect fees worth 4 billion yuan ($583 million) in the first half of next year and will refund payments from the second half of this year. It will also encourage airlines to cancel or postpone planes due in 2009 as a cooling economy damps travel demand.

“The government is helping the Chinese airlines to survive in difficult times,” said Kelvin Lau, an analyst at Daiwa Institute of Research in Hong Kong. Demand may pick up in the third quarter as the U.S. and China have stepped up measures to stimulate the global economy, Lau added.

The Civil Aviation Administration of China announced new policies to help airlines because of losses. China wants to slow the growth of its commercial-aviation fleet after the nation’s airlines racked up losses of 4.2 billion yuan in the first 10 months. The measures include scrapping jet-fuel taxes and refunding some fees.

The airline will also benefit as China’s air traffic recovers from declines, Goldman Sachs analysts Hino Lam and Tom Kin wrote in their report today. Goldman Sachs upgraded its rating on Air China to “neutral” from “sell.”

About the author

Avatar of Linda Hohnholz

Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

Share to...