Air China expects its half-year net profits to increase by at least 50% due to falling jet fuel prices and stronger demand for air travel.

The Star Alliance member says in a statement to the Hong Kong stock exchange that it made a net profit of 1.28 billion yuan ($187.4 million) in the first six months of 2008. Based on this, the state-owned carrier says it is likely to report profits of at least 1.92 billion yuan for the six months ended 30 June.

"The expected increase in profit is mainly due to the favourable conditions such as a fall in fuel purchase cost...a stable growth in the domestic air passenger market, implementation of industry support policies prescribed by the state and effective cost control by the company," says Air China.

It added that a 57% increase in oil prices in the first half of 2009 helped it to reduce paper losses on hedging contracts and will boost profits.

The Beijing-based carrier also posted a 7% increase in traffic in May, spurred on by growth in the domestic market.

Source: Air Transport Intelligence news