Air China, the mainland's largest international carrier, has announced that profit for the first quarter totaled 403 million yuan, on the back of passenger demand and profit from its investment in Cathay Pacific Airways.

On the strength of the good result, the carrier is predicting net profit for the first half may be double the 457.9 million yuan made in the first half of last year.

Net income totaled 403 million yuan or 3 fen a share, the Beijing-based airline said in a statement, citing domestic accounting standards. Sales were 10.5 billion yuan, it added. The company did not provide year-earlier figures.

For 2006, Air China posted a net profit of 3.19 billion yuan which was inflated by a 3.23 billion yuan investment return. The airline recorded a turnover of 40.08 billion yuan.

Rivals China Southern Airlines and China Eastern Airlines both recorded a narrowing of net loss in the first quarter. China Southern said its first quarter loss was 188 million yuan from 603 million yuan while China Eastern's loss was 510.9 million yuan, against 955.1 million yuan a year earlier.

Air China's interest in Cathay Pacific rose to 17.3 percent in a September (2006) share realignment that saw Dragonair become a fully owned Cathay subsidiary. In a research report, Goldman Sachs said it expects Air China's strategic alliance with Cathay Pacific to further raise load factor and yields in 2007 between Hong Kong and the mainland.

"A revenue synergy with Cathay Pacific and Dragonair is expected to be over 600 million yuan in 2007," Citigroup analyst Ally Ma said earlier this month.

"Passenger yield may see positive surprise due to its focus in developing premium traffic. However, we also note that the cargo yield would remain under pressure this year plus a higher-cost base," Credit Suisse analyst Karen Chan said in an early April report.