BEIJING (Bloomberg) — Air China Ltd., facing its first drop in full-year domestic traffic since 2003, forecast an increase of as much as 10 percent next year as the nation's growth shields the carrier from a global economic slowdown.

"The demand for air travel in China is still out there," Board Secretary Huang Bin said in an interview in Beijing yesterday. "We are concerned about the current situation, but we still have the ability to cope with it."

Air China, the country's largest carrier by market value, hasn't pared routes or expansion plans and it also expects continued access to financing from Chinese banks even as the credit crisis tightens lending worldwide.

This year, domestic traffic slipped 2.8 percent in the first eight months as natural disasters and the Olympics disrupted travel.

"If the industry rebounds to a normal level next year, Air China will be able to boost domestic passenger traffic," said Li Lei, an analyst at China Securities Co. in Beijing.

Air China posted the largest monthly fall in passenger numbers in more than five years in August after the government restricted travel for the August Olympics in the capital city. The carrier suspended 60 daily flights during the games as Beijing's airport focused on charter services carrying athletes.

Rival China Eastern Airlines Corp. predicted a nine-month loss, compared with a year-earlier profit, because of a "dramatic decrease" in travel demand.

Air China rose 7.9 percent, the most in more than a month, to HK$3.29 in Hong Kong trading today. The shares have dropped 72 percent this year.

The financial crisis has not hurt demand from the US, with flights filled to as much as 90 percent capacity, Huang said. The airline expects cargo demand to the US may decline as a recession in the world's largest economy cuts imports, though it has not yet seen a drop-off, he said.

In September, China's trade surplus widened to a record as exports surged 21.5 percent. Export growth to the US slowed by 4.6 percentage points from a year earlier to 11.2 percent in the first nine months, the customs bureau said yesterday.

Air China's domestic passenger traffic growth has slowed from 10.6 percent in 2007. It rose 32 percent in 2004. China's rising investments in other countries are also stimulating business travel, Huang said.

In the first half of the year, net income dropped 21 percent to 1.24 billion yuan ($182 million) as the company paid 32 percent more for jet fuel in the period.

Global carriers may post a combined loss of as much as $6.1 billion this year, the International Air Transport Association said in June. The group, whose members account for 93 percent of international airline traffic, forecasted a $4.5 billion profit in April.