China airlines up on lower oil, higher surcharges
Wednesday, July 9th, 2008Shares in Hong Kong-listed China airlines surged on Wednesday, with Air China jumping nearly 9 per cent on a retreat in oil prices and optimism that recent fuel surcharge hikes could help ease the pain of high fuel costs.
“The recent international oil price declines are positive for the airlines, when combined with two rounds of fuel surcharge hikes in the past six weeks,” said Kelvin Lau, analyst with Daiwa Securities.
Shares in Air China rose 9.5 per cent to a session high of HK$4.03 before easing slightly to HK$3.99 by 0347 GMT.
Rivals China Southern Airlines rose more than 9 per cent and China Eastern Airlines soared as much as 12 per cent. But concerns about rising domestic jet fuel prices should continue to pressure China’s aviation industry and the share price of the three mainland airlines should fall in absolute terms over the next 15 days, said Edward Xu, an analyst at Morgan Stanley.
“We expect poor traffic data for June to be released soon, which would serve as a negative catalyst,” Xu said in a research note on Wednesday.
Air China shares have tumbled more than 65 per cent this year mainly on worries over rocketing oil prices that heavily inflated its fuel costs and lower traffic demand caused by a devastating earthquake in China in May.
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