World Wide Wings. Boeing. China

Boeing is a growing concern as we often used that term in Business School at the University. The World Wide Web is an electronic construct linking servers in a web like pattern over the globe. Boeing is a world wide seller of wings  it builds linking cities in a web like manner. The Business plan for any airline is making a web of connections both long legged and serviceable short runs in a wide base of many customers. China has over a billion (1.3 billion) potential customers. The Boeing web of wings is spreading in China. Closer examination is Hainan Airlines portfolio and financials determines its WWW is spreading throughout China and Southeast Asia as a very successful business venture. Central to its business model is the Boeing Aircraft Family from 737 through its latest contribution, the 787.

When Hainan reports a 9% net profit margin then the WWW expands its web.over a potentially lucrative market found in China.

Forget China's recent stagnated growth, its economic slow down, and more competition from others in the airline Industry for China's market place, as many competing airlines want China's flying customers.  Hainans WWW keeps a pace with those constraints with its family of Boeing aircraft.

Hainan Airlines’ 2013 net profit increases 9.2%

Air Transport World: Katie Cantle Referenced article

Katie Cantle 

Mar 21, 2014

China’s Hainan Airlines has reported a net income of CNY2.1 billion ($337 million) for 2013, up 9.2% over the net profit of CNY1.9 billion in 2012.

According to the Haikou-based carrier’s filing released by the Shanghai Stock Exchange, operating revenue rose 4.71% to CNY30.23 billion on operating costs that rose 9% to CNY23.5 billion. Industry analysts credited “exchange gains resulting from the yuan appreciation” as the main contributor to the improved performance.

Hainan noted it experienced “a rapid growth of air traffic volume” last year, but said “the worsening external operating environment” and “slowdown of China’s economic growth” hampered revenues. The carrier’s mainline revenue from air transport operation grew only 2.37% to CNY27.51 billion.

Passenger boardings increased 16.4% to 26.2 million with an average load factor of 86.4%, improving two percentage points over the prior year.

Cargo traffic volume increased by 7% to 313,300 tonnes.

Last year, Hainan introduced 27 aircraft and phased out 13 aircraft, leaving a fleet of 131 aircraft comprising of six Airbus A330-200s, seven A330-300s, three Airbus A340-600s and one A330-VIP; plus one Boeing 737-400, five 737-500s, 99 737-800s, three Boeing 767-300s, six Boeing 787-800s.

WWW of Hainan:

Airbus: Revenue and Cost centers

A330-200  Six

A330-300  Seven

A340-600 Three

A330-VIP

Total= 17 Total Older Airbus Aircraft

Boeing  Revenue and Cost Centers

737-500 Five

737-800 Ninety-Nine

747-400 One

767-300 Three

787-800 Six

Total  114 mixed old and new Boeing Aircraft

Rough Numbers Below:

How much Boeing equipment influences the 9% net profit is considerable in that operational efficiency sets the profit pace using efficient aircraft in a highly volatile fuel price world. The aircraft performance must offset that volatility and contribute to the profit line.

131 total aircraft.

Fleet percentage by manufacturer raw units:

87% Boeing

13% Airbus

Contributions to net profit has a perponderance of Boeing Aircraft types for Revenue and Cost sources. During a slower economy, it is remarkable that Hainan has achieved this net profit number. What is import to know is what write-off's are taken and how each cost center contributes to that bottom net profit number. However, it can be said, "That it is positioned well to expand its WWW throughout the Asia region. Expect more 787-# and 737-MAX to be ordered by Hainan retiring the A340's and its remaining A330's and replaced by 787-8,-9 or -10

Looking ahead, the company expects the air transport market to continue to grow, especially in China’s less-developed cities and it believes domestic airports expansion projects will “bring new opportunities”. But domestic low cost carriers will “exert some impact” on traditional legacy carriers although they have become “new growth points” for China’s airline industry.