TAIPEI, Taiwan Aug. 24 (Bloomberg) – China Airlines, Taiwan's largest carrier, plans to exit all fuel-hedging contracts, locking in paper profits that helped it end six straight quarters of losses.

"When oil prices reach $75 and above, we will get out," Chairman Philip Wei, 67, said in an Aug. 21 interview at the carrier's Taipei headquarters.

The airline was profitable in the second quarter as hedging gains offset an operating loss, he added, without giving any figures.

The Taiwanese carrier joins Singapore Airlines Ltd. in curtailing hedging after posting a NT$21 billion ($638 million) unrealized loss from wrong-way bets on fuel prices in 2009. Oil, which dropped 69 percent from a record last year, has more than doubled from its December low to about $74.

"The uncertainty and volatility in oil prices is too risky to justify gains they may make from hedging," said Tsao Po- hsuan, an analyst at Capital Securities Corp. A number of carriers "were burned last year when oil prices plunged."

Most China Airlines' hedging contracts are at about $75, Wei said, without elaboration. They will expire between April and August next year unless the carrier closes them early. The airline probably won't enter any new positions, Wei said.

The carrier likely had hedging gains of NT$4.2 billion in the second quarter, Tsao said. The airline may post a second- quarter profit of NT$840 million, he added.

The price of oil reached a high of $145.85 on July 3, 2008. It was at $74.25 at 11:48 a.m. China Airlines rose 0.5 percent to NT$8.14 in Taipei trading. The carrier has climbed 6.8 percent this year, trailing smaller rival EVA Airways Corp.'s 13 percent gain.

China Airlines will be suspended from trading from Aug. 27 to Sept. 14 because it's buying back and canceling about 31 percent of its stock. The move is designed to increase the carrier's net value per share, it said in April. The company may issue new shares after selling NT$10 billion of bonds in a private placement.

China Airlines also plans to lease two twin-aisle Airbus SAS A330s next year for mainland flights in anticipation of a further liberalization in cross-strait travel, Wei said. The carrier already operates Boeing Co. 747 jumbo jets on routes to Beijing, Shanghai and Shenzhen because of the demand, he added.

"The 'Golden Route' is now China," Wei said. "It used to be Japan and Hong Kong, but yields there have fallen because of the economic crisis." Yield is a measure of average revenue per passenger.

China Airlines will likely get about 10 percent of sales from cross-strait flights by year's end, up from 7.3 percent, Wei said. The ratio will rise as the carrier will operate 55 flights a week to 13 mainland cities from Aug. 31. It now flies 22 weekly services to seven cities, Wei said.