This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Will Fear of Flying Ground Chinese Airlines After the Malaysia Airlines Disaster?

BEIJING (TheStreet) -- Traveling in China via high-speed rail was in vogue back in July 2011 when two bullet trains collided near the city of Wenzhou, killing 40 people.

The horrific wreck so rocked public confidence in the nation's high-speed railway system that significant numbers of nervous travelers migrated to airlines and slow trains for intercity trips. Negative sentiment hurt sales of bullet train tickets for months after the crash.

Now, China's airlines could face a similar psychological backlash following the March 8 disappearance -- and perhaps a crash into the Indian Ocean -- of a Beijing-bound Malaysia Airlines jetliner. (And as TheStreet's Ted Reed has reported, this hasn't been the only plane to flicker off the radar.)

The first Chinese airline affected by post-MH370 traveler jitters could be the state-owned carrier Air China (AIRYY), whose stock trades in Shanghai and Hong Kong.

Other domestic carriers that could be affected by a fear of flying among Chinese travelers -- and, for that matter, tourists who want a foreign beach in sunny countries such as Malaysia -- include China Southern (ZNH), China Eastern (CEA), and Shanghai-listed Hainan Airlines.

Potential trouble at Air China, and implications for the Chinese airline industry as a whole, were cited Wednesday in a Huatai Securities analysis of the carrier's latest financial report.

"We think that, in the wake of the gradually emerging MH370 incident, an overall rebound for aviation demand will be comparatively more difficult this year," analysts wrote. "The company (Air China) will have to wait for an opportunity to turn around its performance."

Air China posted a 3.3 billion yuan net profit in 2013, the company said Tuesday, a 32% decline from the previous year.

The company reported a 7.3% increase in passengers overall to 77.6 million for the year, thanks to a big jump in international ticket sales, particularly in the Asia-Pacific region. Meanwhile, domestic demand lagged. A Haitong Securities report Wednesday said income from Air China's domestic flights fell 13% last year.

Among Chinese airlines, Air China leads in flights between the mainland and overseas destinations. The Haitong report said the carrier was thus well-positioned last year to benefit from the fact that "more and more (Chinese) tourists are choosing to go out of the country" for holidays.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AIRYY $17.67 0.00%
AAPL $128.46 0.00%
FB $78.97 0.00%
GOOG $558.40 0.00%
TSLA $203.34 0.00%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs