Shanghai Airlines flew into the black in the first half of this year on rising traffic and a government subsidy.

Its net income was 23.41 million yuan (3.41 million U.S. dollars), or 0.022 yuan a share, in the six months against a loss of 134.51 million yuan a year earlier. Its revenue grew 26 percent to 7.03 billion yuan, the carrier said in a statement to the Shanghai Stock Exchange yesterday.

It attributed the growth to booming traffic during the period. The Shanghai-based carrier flew 4.88 million passengers in the first half, a rise of 14.07 percent from a year earlier, and it carried 8.9 percent more cargo at 1.66 million tons.

"The carrier's profit is better than our expectations in the first half, but its load factor on international routes was only 60 percent, much lower than the average," said Tao Wei, an analyst with China International Capital Co Ltd.

Its overall load factor rose to 71.42 percent on average, versus 70.31 percent in the year earlier, it added.

"Global crude prices retreated recently, but Shanghai Airlines hardly gained from the drop as its network mainly covers domestic routes. We expect pressure on the airline from rising costs will further increase in the second half of this year," Tao said.

The carrier also started flying on eight new routes in the first six months, including chartered flights from Shanghai Pudong International Airport to Songshan Airport in Taiwan.

"We enhanced the profitability of routes and improved utilization of all types of aircraft, which led to a positive result," the firm said.

Fan Hongxi, president of the airline, has said soaring fuel costs may prevent it from meeting its earnings goal of 200 million yuan this year.

(Shanghai Daily August 20, 2008)