June 12, 2012 (Chinavestor) Hainan Airlines (SHA:900945) is surprisingly profitable compared to larger rivals, by looking at dynamics within China's increasingly competitive airlines industry. Hainan Airlines (SHA:900945) is the smallest among the big four airlines in China, yet made a lot more money relatively speaking than its larger rivals. China Southern Airlines (NYSE:ZNH) is the largest airliner in China by revenue and fleet size, but Air China (HKG:0753) is a constant contender for the top spot. China Eastern Airlines (NYSE:CEA), the Shanghai based carrier, is keeping up with larger rivals, especially in terms of relative profits to Air China (HKG:0753).
One thing is certain: Air China (HKG:0753) has lost its edge in profitability as smaller rival caught up with China's flagship carrier. Air China (HKG:0753) has the most extensive international routing system among big four airliners but increasingly profitable domestic routes are helping rivals to catch up. This suggests China Southern Airlines (NYZE:ZNH) may be up for a nice surprise next quarter, but watch out for China Eastern (NYSE:CEA) and Hainan Airlines (SHA:900945) as well.