Air China 2007 Net Up 57 Pct on Yuan and Yields

HONG KONG (Reuters) - Chinese flag carrier Air China (0753.HK: Quote, Profile, Research) posted a 57 percent rise in annual net profit on Monday due to yuan appreciation and higher yields, but it faces rising fuel prices and a gloomy outlook for global travel in 2008.

Air China (601111.SS: Quote, Profile, Research), which competes with China Eastern (0670.HK: Quote, Profile, Research) (600115.SS: Quote, Profile, Research) and China Southern (600029.SS: Quote, Profile, Research), said it posted a net profit of 4.23 billion yuan ($597.4 million) for the year ended on Dec. 31 against 2.69 billion yuan a year earlier.

That result beat an average forecast of 3.86 billion yuan by 18 analysts, according to Reuters Estimates.

In January, the parent group of Air China formally proposed a strategic partnership with China Eastern, after China Eastern's minority shareholders vetoed a $920 million plan to sell a 24 percent stake to Singapore Airlines (SIAL.SI: Quote, Profile, Research) and Temasek [TEM.UL].

China Eastern rejected the Air China proposal, pledging to continue seeking another strategic investor.

Shares in Air China, the world's biggest airline by market value, more than doubled in 2007, easily outperforming the 39 percent leap on the benchmark Hang Seng Index .HSI. But the stock has dropped by more than half since the beginning of the year as investors lost confidence in the prospects for restructuring in China's airline industry.

($1=7.081 Yuan)

(Reporting by Joseph Chaney; )