Hong Kong - Air China shares fell in Hong Kong on Wednesday after the Chinese flag carrier reported a 32 percent drop in net profit last year, hit by a weak cargo market.

Net profit in 2013 was 3.32 billion yuan ($534 million), down from 4.91 billion yuan the previous year, the airline said in a statement filed late Tuesday to the Hong Kong Stock Exchange.

It blamed the decline on the struggling world economy, intensified competition and a weak cargo market in a year that also saw revenue decrease by 2.2 percent to 97.63 billion yuan.

The result follows a 35 percent dive in net profit in 2012

caused by high fuel costs and sluggish demand.

“The global economy struggled to recover and China's economic growth slowed in 2013... The cargo market remained sluggish,” the airline said, calling market conditions for the year “severe”.

Revenue from the company's mainland China operations, which make up more than 65 percent of its business, fell 3.31 percent to 64.39 billion yuan, while European operations were up 5.71 percent at 10.15 billion yuan.

Hong Kong-listed shares of Air China closed down 2.51 percent at HK$4.66 ($0.60), while the benchmark Hang Seng Index was up 0.72


Looking ahead to 2014, the airline said: “The aviation industry will continue to face serious challenges such as intensifying competition, dwindling resources, and rising operating costs.”

In May last year the carrier ordered 100 Airbus A320

medium-range single-aisle passenger jets, which carry a catalogue price of $8.8 billion, to expand its fleet capacity.

Air China said it carried 77.68 million passengers in 2013, up 7.27 percent from the previous year.

It also signed an agreement in March 2013 to buy 31 Boeing aircraft at a cost of $5.2 billion, including eight Boeing 777 cargo planes. - Sapa-AFP