Air China posted a loss of US$277 million in the third quarter due to disruptions caused by the Olympic Games and poor hedging on fuel prices, Bloomberg reported. It is the first time in seven quarters that China’s largest international carrier has recorded a loss. Sales fell 4% to US$2.03 billion as the Beijing-based airline was forced to cut many flights during the Olympics. Meanwhile, jet fuel prices dropped 35% in the third quarter – further bad news for Air China as it was left with contracts to buy fuel for more than the spot rate, having hedged in the wrong direction. Overall spending on jet fuel rose 64% due to the airline’s expansion. Air China has a larger overseas network than its domestic rivals, which means it buys more fuel at international prices. The government adjusts fuel prices for domestic routes.
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