Air China parent: Soaring growth for aviation leader

China National Aviation Holding Company is among the most profitable of global airline groups

Now ranked among the 35 truly global airline companies, China National Aviation Holding Company has registered robust growth in profitability, brand value and safety competence over the past 10 years, according to a recently released report from the publicly traded company.

Its core business revenue soared to 96.9 billion yuan ($15.4 billion) in 2011 from $4.1 billion in 2002.

By the end of 2011, with 432 airplanes in operation, its asset-liability ratio fell from 84.1 percent to 69.5 percent, the company said.

"We maintained stable development in various areas including operational efficiency, products and services as well as strategic collaboration," said CNAH President Wang Changshun, adding that in the second half of the year, the group will aim for steady growth while grasping market opportunities and pursuing its strategic development to achieve even better results.

Air China, the main business of CNAH, is the only Chinese civil aviation enterprise listed among "The World's 500 Most Influential Brands" for five consecutive years. Its brand value has now surpassed $9.8 billion.

Over the years, Air China has upgraded its service to a high standard "by strengthening both soft and hard power", Wang said.

In 2011 it was internationally recognized as a first-class air carrier after meeting the four-star standards of SKYTRAX.

Air China has become the choice for travelers and shippers, a result of the company's concern for passengers and safety as its top priority, the president said.

Despite soaring growth in annual flight hours, Air China has continued to provide passengers with a comfortable and safe environment. Internationally, it enjoys a high reputation for safety.

"Only by fully developing double competitive advantages - both political and brand strength - can the company maintain a leading role in the aviation industry and go on the right track in terms of sustainable growth," said CNAH's Party head Wang Yinxiang.

It has now adopted a strategic development plan to integrate its core and support businesses, the group said.

The strategy aims to maintain Air China's leading position in the aviation industry by changing its operation model from "traditional" to "hub" and accelerating business collaboration, resource sharing and cooperative development with member companies.

Today the group has a complete air transport service chain, "achieving outstanding performance in economic benefits, with three of its supporting companies' earning power surpassing $15.8 million", according to the report.

From eye-catching political events to the Shanghai World Expo and the relief work in Wenchuan earthquake, CNAH is willing to play a part.

Since its founding, the group has invested $18.6 billion in society and paid $5.2 billion taxes to the government.

It has also fulfilled its social responsibilities by donating $78.9 million to social work and providing 42,000 jobs domestically.

As a responsible corporate citizen, Air China took part in relief work following the 2008 Wenchuan earthquake, transporting 2,939 tons of materials, proving 656 first-aid flights and 13,452 personnel from the military and medical profession.

The company's donation was over $3.9 million.

"The company is aiming to become a first-class global giant in the aviation industry with international competitiveness and standardized development direction," the president said, adding that annual net profit is expected to climb to more than $2.53 billion with some 700 airplanes by the end of the 12th Five-Year Plan (2011-15) and 27 billion ton-km in annual transport volume.

Established in 2002, CNAH was a State-owned enterprise authorized by the State Council, but is now becoming a brand-new carrier comprised of Air China, Air China Cargo, Shenzhen Airlines, Shandong Airlines, Beijing Airlines, Dalian Airlines, Air China Inner Mongolia Co Ltd and Air Macau.

It has also deepened cooperation with Cathay Pacific and the Star Alliance.

A challengeable start

In 2003, China's aviation industry suffered a "cold winter" when most of the industry was hit hard by SARS.

As the only profitable air carrier in China, CNAH, though not immune from the impact, strengthened its policies and analyzed the market climate, after which it reached a net profit of $27.9 million and continued to make profits for three consecutive years.

The year 2004 marked Air China's massively successful IPO and rapid growth in the company's capital flow. International capital markets have since been open to Air China.

In 2006, Air China established a strategic partnership with Cathay Pacific Airways, initiating HK$35 billion ($4.5 billion) in corporate financing with five listed companies and three blue chips in Hong Kong as the first step to become a global aviation giant.

By entering the mainland stock market, it greatly improved its capital structure and reduced financing costs.

In 2007, Air China officially joined the Star Alliance, the largest aviation alliance worldwide, and expanded its network to 1,290 destinations in 189 countries and regions.

The company's net profit was $358 million in 2005 and grew to $786 million in 2006, 1.8 times the total profit of the entire industry that year.

In 2007, the figure rose to $881 million, accounting for 59.2 percent of the country's aviation industry performance, according to the report.

Promising future

In 2010, Air China set a record in China's aviation industry with a staggering profit of $2.37 billion and network coverage in 30 countries and regions and 143 cities.

Around its Beijing hub, the company continued to boost investment and constructed four flight banks, introduced the Airbus 330, the Boeing 777-300ER and promoted electronic tickets, online check-in and call centers to provide safer, greener and high-quality services for passengers.

The president said that by the end of the 12th Five-Year Plan (2011-15), the group will become a first-class international aviation company with a total asset of $44.12 billion and annual revenues of $23.7 billion.

In 2012, the company was honored with the title of "National Employment Flagship Enterprise".

The author is a staff member of the Public Relations Office of China National Aviation Holding Company and you can reach him at cnah2009@sina.com.