Hong Kong (Platts)--28Oct2009/247 am EDT/647 GMT

China's three largest airlines posted profits for third quarter 2009 on the back of improved demand for air travel, lower jet fuel costs and fuel hedging gains, the airlines said in separate statements late Tuesday.

China Eastern Airlines, the country's No. 3 carrier, posted Q3 net profits of Yuan 23.16 million ($3.4 million) according to Chinese accounting standards, compared with a net loss of Yuan 2.33 billion a year earlier, in a statement to the Hong Kong Stock Exchange.

Revenue for Q3 rose 5.5% to Yuan 11.4 billion from Yuan 10.81 billion over the same period, the airline said.

The net gain on the change in the fair value of its fuel hedging position rose Yuan 154 million in the three-month period, and cash outflow from actual settlement was Yuan 231 million, it added.

For the nine months ended September 30, China Eastern's net profit totaled Yuan 1.2 billion, reversing a net loss of Yuan 2.29 billion in the same period a year earlier, the airline said.

The country's flag carrier Air China posted a Q3 net profit of Yuan 885.3 million ($129.7 million) according to Chinese accounting standards, rebounding from a net loss of Yuan 1.94 billion a year ago, the airline said in its statement to the HKSE.

The airline reported a Yuan 2.075 billion gain from changes in the fair value of financial derivatives as a result of hedging positions taken during January to September of this year, a 439.4% surge from a year ago.

Of this total, Yuan 2.02 billion was a gain on changes in the fair value of fuel-hedging contracts in the nine month ended September 30, 2009 -- the difference between the recovery of Yuan 4.664 billion in fair value and a Yuan 2.649 billion decrease in fair value from settlement of several fuel-hedging contracts taken in the period, Air China said.

China Southern Airlines Co. also swung into net profit in Q3, of Yuan 284 million ($41.6 million) according to Chinese accounting standards, rebounding from a loss of Yuan 810 million a year ago, the company said in its statement to the HKSE.

Its net profit lept to Yuan 322 million for January-September, from Yuan 28 million in the same period a year earlier.

The company reported strong growth in cash flow from operating activities for the nine month period -- a 162% jump year on year to Yuan 9 billion -- amid a fall in operating expenses due to the decline in jet fuel prices.

China Southern said gain in the fair value of its financial assets was Yuan 94 million in Q3, but the statement did not mention any hedging or positions in oil derivatives.

The three Chinese carriers hit turbulence in Q3 last year due to a plunge in demand for commercial flights during the global economic recession, soaring jet fuel costs and massive fuel hedging losses, contibuting to them chalking up a combined loss of more than $4 billion for 2008.

The Chinese government has moved to support domestic airlines through a number of capital injections, a respite in jet fuel surcharge tax and refunds from the China Infrastructure Development Fund.

--Winnie Lee; winnie_lee@platts.com