Oct. 28 (Bloomberg) -- China Southern Airlines Co., Air China Ltd. and China Eastern Airlines Corp., the nation’s three biggest carriers, all rebounded to profits in the third quarter as economic growth spurred domestic air travel.

China Southern, Asia’s biggest carrier by passenger numbers, posted a net profit of 284 million yuan ($42 million), compared with a loss of 830 million yuan a year earlier, according to a stock exchange statement late yesterday. Air China had an 885 million yuan profit, compared with a loss of 1.97 billion yuan.

Nationwide passenger numbers rose 20 percent in the first nine months as government stimulus measures shielded China from the worst of the global recession. Air China and China Eastern also made fuel-hedging gains on rising oil prices.

“The aviation market has recovered quite a lot from the downturns,” said Jack Xu, an analyst at Sinopac Securities Asia. “The big three are likely to report full-year profits given the sales performance and write-backs from the hedging contracts.”

China Eastern, the nation’s No. 3 carrier, reported a profit of 23.2 million yuan, compared with a net loss of 2.33 billion yuan a year earlier.

The Shanghai-based carrier made a paper profit of 154 million yuan from fuel hedging during the period, which offset a 73.3 million yuan operating loss. Beijing-based Air China posted a 554 million yuan fair-value gain.

The two carriers reported fair value losses totaling 1.33 billion yuan a year earlier as the price of oil plunged from a record high. China Eastern will continue hedging depending on oil prices, President Ma Xulun said today in Beijing.

China Southern, which predominately flies domestic routes, boosted sales 9.5 percent to 15.95 billion yuan. Air China, the nation’s largest international carrier, said sales rose 1.3 percent to 14.1 billion yuan. China Eastern’s sales climbed 5.5 percent to 11.4 billion yuan.

Economic Growth

China, the world’s third-biggest economy, expanded 8.9 percent in the third quarter, the fastest pace in a year, spurring demand for business and leisure flights. Air travel was also disrupted in the third quarter of last year by security measures put in place for the Beijing Olympics.

Air China, the world’s second-largest carrier by market value, rose 0.7 percent to HK$4.35 in Hong Kong trading at 11:11 a.m. China Eastern was unchanged at HK$2.27, while Guangzhou- based China Southern rose 1.7 percent to HK$2.43. They have all gained more than 80 percent in Hong Kong this year.

The government has acted to support airlines by bailing out China Eastern and China Southern after losses and scrapping some fuel taxes. China Eastern is also buying smaller neighbor Shanghai Airlines Co. in a state-backed deal to gain a market share of more than 50 percent in China’s financial capital.

Chinese airlines are only allowed to use fuel-hedging on overseas routes as the government controls the price on domestic services. China Southern closed all of its hedging positions last year.

For Related News and Information: Top transport news: TRNT <GO> China airline news: TNI CHINA AIR <GO> Asia-Pacific Airline Traffic Data: STNI APAIRTRAFFIC <GO>

Last Updated: October 27, 2009 23:21 EDT