Can''t rule out a merger in the near future: Air China

Mainland China''s largest freight carrier, Air China, said on 29 August that it would not rule out the possibility of merging with a rival, including China Southern Airlines, to raise its competitiveness. Air China president, Cai Jianjiang, made these remarks in response to questions about whether the country's three largest airlines would be restructured.

Air China has 53 per cent of the cargo market and 43.8 per cent of the passenger market in Beijing. It expects to increase its market share to 60 per cent for cargo and 50 per cent for passengers by 2010.

A string of small state-owned and central government-controlled airlines are being restructured in an effort to fend off competition from outsiders. And, as is only to be expected, rumours are flying that China''s three largest airlines will be restructured.

Air China on 28 August posted a 1.5 billion yuan ($199 million) net profit in the first half of the year, a year-on-year increase of 240 per cent, while its operating revenue rose 17.17 per cent to 23.3 billion yuan ($3 billion). The company attributed the growth to accelerating demand for air travel, despite increased fuel costs.

The company said the hedging ratio of fuel was at 40 per cent. He stressed that the company would continue to adopt fuel-saving strategies to minimise the impact of oil price fluctuations. Air China expects that oil prices will hover around $75 per barrel in the second half of the year.

Air China has launched about 700 Olympics products and has posted 158 million yuan ($21 million) in sales revenue. Its ''other'' income is expected to reach 580 million yuan ($77 million) during the Olympic Games next year.