Flag carrier Air China said on Jan. 16 that it expected to report a loss for 2008 because of slumping traffic demand and higher fuel prices during much of the year.

The airline, which is due to announce results in mid-April, said the loss would be "significant". In 2007 it made a net profit of 3.88 billion yuan (US$568 million).

Air China also estimated that because of the plunge in oil prices late last year, fair value losses on its fuel hedging contracts had increased to 6.8 billion yuan at the end of last year from 3.1 billion yuan in late November.

However, it noted that those losses could change during the remaining period of the contracts, and added that the drop in oil prices had also helped the company cut its spot oil purchasing costs.

China's two other major airlines, China Southern Airlines and China Eastern Airlines, also predicted earlier this week that they would post losses for 2008.

Photograph: Many Air China aircraft parked at Beijing Capital International Airport (BCIA) on Mar. 26, 2008.