Overall load factor (RTK/ATK) (%)

– Domestic  67.3  69.1 
– Hong Kong, Macau and Taiwan  55.0  55.1 
– International  54.9  53.8 
Overall  64.4  65.1 

12 ANNUAL REPORT 2008

Management Discussion and Analysis

For the year ended
2008 vs 2007
31 December
Increase/

2008 2007
(decrease)
%

Yield
Yield per RPK (RMB)
–
Domestic

–
Hong Kong, Macau and Taiwan

–
International Overall

Yield per RTK (RMB)

–
Domestic

–
Hong Kong, Macau and Taiwan

–
International Overall

Fleet
Total number of aircraft at year end
–
Boeing

–
Airbus

–
McDonnell Douglas

–
Others

0.59  0.60 
0.84  0.91 
0.67  0.63 
0.61  0.61 

5.90  5.88 
9.23  9.91 
5.47  5.03 
5.86  5.75 

179  177 
133  119 
25  25 
11  11 

Total 348 332
Overall utilisation rate (hours per day)

–
Boeing

–
Airbus

–
McDonnell Douglas Overall

Cost

–
Operating cost per ATK (RMB) 4.33 3.73

9.38  9.87 
9.01  9.21 
7.41  7.93 
9.05  9.41 

ANNUAL REPORT 2008 13

Management Discussion and Analysis

OPERATING REVENUE
Substantially all of the Group’s operating revenue is attributable to its air transport and related operations. Traffic revenue accounted for 97.5% and 97.8% of the total operating revenue in 2008 and 2007 respectively. Passenger revenue and, cargo and mail revenue accounted for 93.5% and 6.5% respectively of the total traffic revenue in 2008. The other operating revenue is mainly derived from commission income, income from general aviation operations, fees charged for ground services rendered to other Chinese airlines and air catering services.

FINANCIAL PERFORMANCE
The loss attributable to equity shareholders of the Company of RMB4,823 million was recorded in 2008 as compared to a profit attributable to equity shareholders of the Company of RMB1,839 million in 2007. The Group experienced a slow down of growth in traffic revenue and rising operating expenses as a result of global financial crisis and increase of jet fuel cost. The Group’s operating revenue increased by RMB887 million or 1.6% from RMB54,401 million in 2007 to RMB55,288 million in 2008. Passenger
load factor decreased by 0.7 percentage point, from 74.5% in 2007 to 73.8% in 2008. Passenger yield (in passenger revenue per RPK) was RMB0.61, which was unchanged from 2007. Average yield (in traffic revenue per RTK) increased by 1.9% from RMB5.75 in 2007 to RMB5.86 in 2008. Operating expenses increased by RMB8,811 million or 16.6% from RMB52,956 million in 2007 to RMB61,767 million in 2008. As a result of the increase in operating expenses which outweighed the growth in revenue, operating loss of RMB6,538 million was recorded in 2008, as compared to operating profit of RMB1,575 million in 2007.

The increase in operating revenue was primarily due to a 1.8% rise in passenger revenue from RMB49,499 million in 2007 to RMB50,412 million in 2008 resulting from increase in fuel surcharge income. The total number of passengers carried increased by 2.3% to 58.24 million passengers in 2008. RPKs increased by 1.8% from 81,727 million in 2007 to 83,184 million in 2008, primarily as a result of the increase in number of passengers carried. Passenger yield per RPK was RMB0.61, which was unchanged from 2007.
　
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