The company will not add to its existing positions and has been trying to adjust existing contracts to stem losses, the Shanghai Securities News reported, citing Fan Cheng, vice president of Air China.

The decision came amid a recent investigation by the National Audit Office of Air China and other state-run companies with big losses from hedging contracts, the report said.

Hedging is an investment strategy designed to eliminate risks of price rises, with contracts to pay for fuel set at one level. But it can lead to significant paper losses if prices drop.

The price of fuel has fallen dramatically over the past several months, as the cost of crude oil tumbled from a record high above 147 dollars a barrel last July to five-year lows near 32 dollars in December.

Fan said Air China would continue to use fuel hedging contracts in the future to help fix its operational costs, meaning they would take them out only if they could readjust existing contracts at a lower price.

The company has said earlier it expected to post a "significant loss" for last year due to shrinking demand for travel and cargo and misjudged fuel hedging contracts.

It said its fair value loss of fuel hedging contracts, or unrealised paper loss, was 6.8 billion yuan (945 million dollars) at the end of December.

All rights reserved. � 2005 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.