The Hong Kong Aircraft Engineering (HAECO) group posted HK$261 million of post-tax profits in the first six months of this year, compared to HK$240 million during the period last year.

HAECO, which is part of the Swire Group's aviation division, was the strongest performer of the segment and helped offset HK$331 million post-tax losses from the Cathay Pacific airlines.

Swire reported strong passenger demand for Cathay Pacific and Dragonair, but substantially higher fuel costs and a HK$468 million (US$60 million) anti-trust settlement for Cathay's cargo business hindered profitability.

Overall, Swire's aviation division only had HK$10 million profits from January through June, compared to HK$1,283 million during the first six months of 2007.

HAECO recorded a total profit of HK$591 million in the first half, which is about 8% over the period last year (Cathay Pacific's share of HAECO's profit was included in the airline's HK$331 million loss figures as reported above).

HAECO's heavy aircraft maintenance facilities in Hong Kong and Xiaman are working near capacity, according to Swire, and its line maintenance business increased moderately from aircraft movements at Hong Kong International Airport (HKIA).

Swire also reported "profitability with TAECO [Taikoo (Xiamen) Aircraft Engineering Co.] was comfortably above 2007 levels despite the impact of Renminbi appreciation," and HAESL's (Hong Kong Aero Engine Services Ltd.) results were "satisfactory."

HAECO group investment projects to watch including a third hangar in Hong Kong on schedule to open in mid-2009, a new TAECO training center scheduled to open in the last quarter of this year, a sixth hangar at TAECO scheduled to open in late 2009, and an component repair facility extension at HAESL in early 2010.

Other recent notable activity at HAECO includes the acquisition of 85% of GE's Xiamen-based engine overhaul company in June, and an agreement reached in July with Sichuan Airlines to form a joint venture line and heavy maintenance business initially for Airbus A320s. The first joint venture maintenance hangar at Chengdu International Airport is slated for the first half of 2010, according to Swire.