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Air China said "its passenger and cargo transport business achieved an above average performance". Photo: AFP

Air China blames yuan depreciation for 55.42pc fall in first-half profit

Air China reported a 55.42 per cent fall in first-half earning to 510 million yuan (HK$642.5 million) as mainland airlines suffer from the depreciating yuan.

Air China

Air China reported a 55.42 per cent fall in first-half earning to 510 million yuan (HK$642.5 million) as mainland airlines suffer from the depreciating yuan.

Turnover rose by 8.5 per cent to 49.9 billion yuan while profit attributable to shareholders dropped from 1.145 billion yuan in the same period last year, the company said in an announcement filed with the Hong Kong stock exchange late on Tuesday.

The company said “its passenger and cargo transport business achieved an above average performance, although the renminbi-to-US dollar exchange rate was volatile and has dragged down the overall performance for the first half of the year”.

It recorded a net exchange translation loss of 721 million yuan, compared with a net exchange translation gain of 1.119 billion yuan in the same period last year.

Analysts said the results were in line with or even slightly above expectations and the fundamentals were improving. Net profit would have improved 294 per cent year on year if adjusted to exclude exchange rate losses or gains and other disposal gains, Daiwa Securities said in a note.

Operating profit increased 64 per cent to 2.3 billion yuan. Jefferies analyst Boyong Liu said that was mainly because of “lower fuel price, higher government subsidies and improving cost efficiencies”.

Yield, which measures per unit profitability for airlines, declined 3.33 per cent to 0.58 yuan for its passenger business and 2.53 per cent to 1.54 yuan for cargo.

The airline carried a total of 40.14 million passengers, 7.19 per cent more than the same period last year. Outbound travel from the mainland drove the volume growth in international routes, Barclays analyst Patrick Xu said in a note.

Passenger revenue from international routes grew 11.2 per cent and that from Hong Kong, Macau and Taiwan routes by 8.1 per cent, faster than domestic growth of 5.4 per cent. Non-domestic routes accounted for 32 per cent of total passenger revenue of 44 billion yuan.

Load factor, which measures how successful an airline is in filling its planes, fell by 0.52 of a percentage point to 80.5 per cent for its passenger business and 3.31 percentage points to 53.95 per cent for cargo.

The mainland’s two other major airlines, China Southern and China Eastern, are due to post results on Thursday. Both have warned of steep declines, citing exchange losses as the reason.

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