Business

The first Singapore Airlines A380 superjumbo, the world’s biggest passenger aircraft, arrived in Beijing on Saturday with the first members of Singapore’s Olympic delegation.

SIA is to fly the A380 daily from Singapore to Beijing until Friday, when the Olympic Games open, in a week of special Olympic flights to cater for increased demand.

The first flight, carrying 385 customers and 25 crew, left Changi Airport at 8:40am and arrived at 2:50pm with 12 athletes and 18 officials from Team Singapore led by chef de mission Tan Eng Liang. They are part of the largest Singapore team to take part in the Games since 1956.

SIA revert to the Boeing 777 aircraft after Friday.

SIA was the first airline in the world to fly the A380, putting it into service in October last year.

(Xinhua News Agency August 4, 2008)

Around 260,000 passengers on 1,500 flights will pass through Beijing Capital International Airport each day after Aug. 1, setting new records in the airport’s history, Civil Aviation Administration of China (CAAC) deputy administrator Yang Guoqing said on Thursday.

Since most Olympic delegations and spectators would arrive in early August, the number of flights arriving and departing would increase by a fifth over the normal levels. The number of passengers would increase by a quarter, Yang said a press conference.

He added the CAAC was confronted with the unprecedented challenge in handling the heaviest and most complicated air traffic in Chinese history.

“We will strive to provide safe, rapid and convenient services to all Olympic participants,” he said.

In early August, the Capital Airport expected to receive 100 special flights for state leaders, 160 chartered flights and 1,000 business aircraft flights, said Huang Dengke, CAAC North China Regional Administration director-general.

The busiest time would range from Aug. 6 to 11, with Aug. 7 the peak.

Huang said the airport would handle more flights and passengers for the Olympics than for the 1990 Asian Games and the 2006 Beijing summit of the Forum on China-Africa Cooperation, but capacity had been greatly improved since the opening of the new Terminal 3 earlier this year.

“Beijing is prone to thunderstorms in early August. We have prepared four alternative airports in the northern cities of Tianjin, Shijiazhuang, Taiyuan and Hohhot. Each will have 100 emergency parking bays.”

Yang Guoqing said that in 2000, the CAAC began to improve the basic infrastructure at 17 airports in Beijing, Tianjin, Shenyang, Shanghai, Qinhuangdao and other host cities, including the alternate airports.

From July 20, those airports adopted double security checks — a check at the airport entrance and another before boarding, he said.

In March, a China Southern Airlines crew reportedly foiled an attempted airline bombing on a Urumqi-Beijing flight.

Airports in northwestern Xinjiang Uygur Autonomous Region and western Tibet Autonomous Region have also started double security checks.

“We tried to make security checks as fast as possible, and hopefully this will not inconvenience passengers or affect airline services,” said Yang.

He said all the airline companies should provide safe and comfortable services, and should have plans for delayed flights and other emergencies. Those airlines whose passengers refuse to disembark or complaints are disruptive would face penalties.

In line with international custom, Beijing’s airport would be shut from 7 p.m. till midnight on Aug. 8 to ensure the security of the Olympic opening ceremony.

“We informed the airline companies a month ago,” he said, adding the airport would return to normal quickly after the opening ceremony.

(Xinhua News Agency August 1, 2008)

Facing soaring oil costs and a dwindling demand in leisure travel, airlines, hotels and travel service providers have turned toward business travelers, heeding their calls for not just space and comfort but also eco-friendliness and efficient travel management.

Airlines are also following businesses wherever they go, cutting domestic lines while adding Asian lines to cities such as Beijing and Shanghai.

At the July 28-30 National Business Travel Association (NBTA) International Convention and Exposition, several airlines unveiled larger, more luxurious businesses and first-class seats.

Continental Airlines, for example, announced its long-anticipated lie-flat seat for the BusinessFirst class, to be retrofitted on Boeing 777 aircraft serving trans-Pacific and trans-Atlantic flights next fall.

The $100 million design and retrofit project also features connectivity to Apple’s iPod mp3 player, a universal charger and a 15.4-inch on-demand video monitor.

Not to be outdone, Qantas invited designer Marc Newson, the well-known designer to redesign its A380 luxury experience, including the new First Suite, the new fully flat Skybed for business class, and even Marc Newson-designed amenity kits.

Japan Airlines (JAL) and Singapore Airlines, known for their luxury seat designs and in-flight services, also upped the ante on upper-class cabins.

In September, JAL will have removed the existing 11 first-class seats on its trans-Pacific flights and replaced them with eight, larger suites with the latest audio-visual amenities.

Singapore Airlines unveiled the Singapore Suite, a class beyond First featuring down duvets and Givenchy PJs.

How do struggling airlines afford to spend on upgrading luxury seats and lower seat counts at the same time, you might ask. Maverick airline JetBlue was the first to figure out that cutting a few seats while giving customers more of what they want would end up improving the bottom line, as fewer passengers would mean lower fuel cost and more customer satisfaction would lead to retention in this gloomy travel climate.

The NBTA convention, with 6,400 registered attendees, also saw new trans-Pacific lines added while many US domestic flights were cut earlier this summer.

India-based Jet Airways started a San Francisco-Shanghai line in June, and it plans to fly from San Francisco to Tokyo in September.

Hainan Airlines is happy about its Beijing-Seattle daily flight inaugurated in June, and it plans to open a Beijing-Boston flight in 2009. Dubai-based Emirates announced two new lines, San Francisco-Dubai and Los Angeles-Dubai, to begin in October.

While business travel costs are expected to go up by about 6 percent, according to an NBTA spokesperson, corporate travel managers saw new benefits such as wider mileage alliances and more eco-friendly airlines and aircraft.

The much-anticipated Boeing 787, for example, will use 20 percent less fuel, featuring a one-piece fuselage section, eliminating 1,500 aluminum sheets and 40,000-50,000 fasteners.

Qantas, after refitting its A380 planes with new luxury seats, said they are now 50 percent quieter and 10 percent more fuel-efficient per person.

Continental, which has a mileage partnership with China Southern Airlines through the SkyTeam Alliance, announced in June it would join United’s Star Alliance.

(China Daily August 1, 2008)

China Eastern Airlines will continue its talks on share sale to Singapore Airlines to improve its financial conditions in the dull aviation market.

Luo Zhuping, board secretary of China Eastern, told China Daily yesterday that the company would continue discussions regarding the share sale deal with Singapore Airlines after the Olympics in August.

“We will discuss this issue after the Olympics, and all things will become clear then,” said Luo.

He added that the asset liability ratio of China Eastern is at a dangerous level of 95 percent, the highest among China’s three largest carriers. “Introducing Singapore Airlines can help us improve financial status and enhance the service quality,” said Luo.

In January, China Eastern’s proposal to sell a 24 percent stake to Singapore Airlines and Temasek at HK$3.8 per share was rejected by its shareholders. The agreement will expire on August 9, but Luo said: “It can be prolonged, theoretically”.

But Xia Fulu, an analyst at Industrial Securities, said Singapore Airlines is expected to ask for a lower price for the possible deal because of the current lower stock price of China Eastern and the heavily squeezed profit margin of carriers in the gloomy aviation market.

H shares of China Eastern have fallen to HK$2.5 yesterday, as record-shattering oil prices have swung many Chinese airlines into the red in the first half.

Meanwhile, Singapore Airlines also reported profits in the three months ended June 30 dropped 15.4 percent compared with the same period last year because of the escalating fuel costs.

China Eastern has cut some international flights and used fuel oil futures serving as a hedging tool for the company against being exposed to price fluctuation.

US brewer Anheuser-Busch Cos Inc (AB) accepted a sweetened $52 billion takeover bid from Belgium-based InBev in July, creating the world’s largest beer maker, which will produce a quarter of the world’s beer, with Budweiser as its flagship brand.

The deal is an indication of the willingness of international beer giants in the sector to cooperate on a higher level.

The two companies’ footprints in China are complementary. InBev’s China business in southeastern China will be enhanced by AB’s strength in northeastern China, according to a statement published on InBev’s website.

InBev entered the Chinese market in 1984, and it has since owned 33 private and joint-venture factories with an annual capacity of four million kiloliters. The company currently ranks No 3 in the sector in China and already has partnerships with smaller Chinese players including Zhejiang Shiliang Brewery, and owns 100 percent of Fujian Sedrin Brewery.

After the deal, it will obtain AB’s 27 percent stake in China’s Tsingtao, the leading Chinese premium brewer, as well as ownership of the Harbin Brewery Group’s 13 breweries.

In addition, InBev will own AB’s Budweiser, which is a strong and growing brand in China and Corona Extra, which is the No 5 brand globally.

Xiao Derun, director of the Beer Branch of China Alcoholic Drinks Industry Association, said the new company would take up 25 percent of China’s total beer production.

CR Snow, which is currently China’s No 1 brewery, produces in the region of 6.9 million kiloliters annually. The new combined company is expected to become the largest beer manufacturer in China with a capacity of 10 million kiloliters a year.

Industry insiders predict that the major competition in China’s beer market will be between InBev and CR Snow in coming years.

China imported more edible vegetable oil at a higher cost in the first five months of this year, as demand remained strong at home and prices were buoyed by a shortage of supply worldwide.

Between January and May, China imported 3.57 million tons of edible vegetable oil, a year-on-year increase of 11.1 percent.

The arrivals were valued at US$3.98 billion, up 94.7 percent, the General Administration of Customs said. The import price averaged US$1,114 per ton, up 75.2 percent.

The imports included 2.07 million tons of palm oil, up 23.4 percent, and 1.13 million tons of soya-bean oil, up 7.7 percent.

The two combined to make up 89.6 percent of the total.

Most of the edible vegetable oil imports came from ASEAN members, which accounted for 2.33 million tons, or 65.2 percent, of the total amount imported.

Customs sources attributed the growing imports to strong demand and limited production at home.

Last year China consumed around 22.5 million tons of edible vegetable oil but it only produced 9 million tons.

The supply gap was widened by natural disasters.

The severe winter weather in southern China and the May 12 earthquake in Sichuan damaged vast plots of farmland sown to rape seed, thus affecting domestic production of rapeseed oil.

In addition, the northeastern province of Heilongjiang, which is a major soya-bean production base, suffered droughts last year and saw its soya-bean yield decline by some 30 percent from the year before.

(Xinhua News Agency July 28, 2008)

As a major textile producer, China is the world’s largest cotton importer, but its appetite for the fiber has been affected by weaker growth in textile exports, official statistics show.

China imported 211,000 tons of cotton in June, down 16.4 percent year-on-year and down 12.1 percent month-on-month, the General Administration of Customs reported on Thursday.

First-half imports fell 52 percent to 1.18 million tons.

Industry analysts attributed the declines to export weakness.

First-half textile and clothing exports rose 11.1 percent to $81.7 billion, but the growth rate was 6.4 percentage points less than the same period of last year.

The textile industry has also been affected by the stronger Chinese currency, tight monetary policy that has made financing more expensive, higher labor costs and rising raw material prices.

(Xinhua News Agency July 25, 2008)

China National Gold Group Corp, owner of the nation’s third-biggest gold mining company, is seeking an initial public offering in its base-metals unit to fund expansion.

The share sale could be in Hong Kong or on the mainland, General Manager Sun Zhaoxue told reporters in Beijing last Friday. He didn’t say when a share sale may take place.

China’s economy has grown at an average 10 percent annual pace over the past five years, spurring demand for metals used to make cars, buildings and appliances. China National Gold is also seeking overseas acquisitions, Sun said.

“The company will increase production of copper, lead, zinc and molybdenum, along with gold,” Sun said.

The firm has gold reserves of 1,046 metric tons, 817 tons of silver, 3.8 million tons of copper, 598,000 tons of molybdenum, and 850,000 tons of lead and zinc, Sun said.

China National Gold and partner Jinchuan Group Ltd in July won a tender to develop the country’s largest gold project. The Yangshan mine, in Gansu Province, has estimated reserves of 308 tons, more than twice as much as Zijinshan mine, the largest producing-bullion project in the country, according to Bloomberg News.

China National Gold will inject the Yangshan project into its Zhongjin Gold Corp unit when the “time is right,” Sun said. The firm expects to complete a feasibility study on the mine by the end of the year, and take three years to build the project, he said.

China’s demand for gold gained 23 percent in 2007, as rising incomes spurred jewelry buying, making the nation the second-largest consumer. Bullion soared to a record in March, increasing competition for mines in China.

Chinese gold mining companies produced 129.1 tons of bullion in the first six months of the year, up 5.6 percent, Zhang Bingnan, vice chairman of China Gold Association, said.

(Shanghai Daily August 4, 2008)

A worker at a steel mill in Zhejiang Province.  [China Daily]

The profit margin of Chinese steelmakers is likely to be further squeezed in the second half of the year due to the possible shrinkage of market demand.

“The government’s continuing tightened monetary measures, combined with declining steel exports, are expected to dampen demand,” said Jiang Qiu, an analyst at Guotai Jun’an Securities.

China exported 5.22 million tons of steel in June, down 6.12 percent from May. “The exports decline shows the decreasing demand overseas,” said Zhao Zhicheng, an analyst at Essence Securities, in a report.

The possibility of the government increasing the steel exports duty, which would curb exports, can also not be ruled out, said Zhao.

Meanwhile, the rising costs from iron ore, coking coal, fuel, transportation and labor are continuing to eat into steelmakers’ profits.

Although the earnings reports of several steel companies in the first half have restored some confidence in investors, analysts said the corporate profit margin is expected to be narrower.

Of nine listed steel companies that reported earnings, eight have reported profit increases. Guangzhou Iron and Steel Co Ltd reported that earnings surged over 200 percent from January to June, and Jinan Iron and Steel said profit increased by more than 50 percent.

But statistics from China Iron and Steel Association showed the profit margin of mid-siz and large steelmakers was 7.61 percent in the first half, down 0.95 percentage point from the same time last year.

Zhao Xiange, an analyst at Everbright Securities, said the weak market demand has triggered the fall of steel product prices in July. “The high transportation fee and natural disasters curb the demand of domestic users,” said Zhao.

“Steel profits are expected to go downward in the fourth quarter, when market supply will increase but demand will still be at a low level,” Jiang said.

(China Daily August 1, 2008)

Intel Corp, the world’s biggest chip maker, has given an optimistic sales forecast for this quarter, signaling that demand for electronics is holding up better than analysts predicted.

Third-quarter sales will be US$10 billion to US$10.6 billion, California-based Intel said on Tuesday. That compares with an average prediction of US$10 billion in a Bloomberg News survey.

Computer processor sales remain strong worldwide, with no signs of the United States economy sapping demand, Chief Financial Officer Stacy Smith said.

Even if the domestic market slumps, overseas orders should be able to fuel growth, said Graham Tanaka, president of New York-based Tanaka Capital Management.

“Slowing domestic growth doesn’t mean Intel will slow dramatically - it’s being offset by growth in Asia,” Tanaka said in an interview with Bloomberg Radio. “Growth in China, in India, in Southeast Asia was very strong.”

The European Union is preparing new antitrust charges, broadening an earlier probe of Intel’s marketing and sales systems, the Wall Street Journal reported yesterday, citing people familiar with the matter. The charges claim that Intel has given big retailers incentives not to sell computers using chips from competitor Advanced Micro Devices Inc, the newspaper said.

Intel’s European head, Jeff Clark, said in a Bloomberg Television interview yesterday that he wasn’t aware of any new charges being prepared by the EU.

Intel rose 2 percent to US$21.13 in German trading yesterday and has lost 22 percent this year.

(Shanghai Daily July 17, 2008)