China Southern Airlines (CSA) said its plunge into the red in the first half of this year was a direct result of Asia's financial turmoil and the mainland's slower economy. The mainland's largest airline had a loss of 72.27 million yuan (about HK$67.25 million) in the period, compared with a 409.33 million yuan profit a year earlier. Turnover declined 7.8 per cent from a year earlier to 5.74 billion yuan. Losses per share were two fen, compared with earnings per share of 19 fen a year ago. No interim dividend was proposed. 'Our result reflects the extremely difficult operating environment,' chairman Yu Yanen said. The weakening mainland economy put pressure on the aviation industry, he said, cutting into passenger load factors and passenger yields for international, Hong Kong and regional routes. In the half, CSA's passenger load factor was 60.2 per cent, 6.1 percentage points lower than a year ago, while its passenger yield dropped 12.4 per cent to 57 fen per revenue passenger kilometre. CSA also faced severe competition from local rivals under the policy of discounted air-fare pricing by the Civil Aviation Administration of China, Mr Yu said. SG Securities (HK) mainland product manager Xue Lan said, 'Everybody expected the result to be bad. 'But it is a very disappointing result' nonetheless, she said. 'It reflects the economic slowdown in the region.' Ms Xue expected CSA to incur bigger losses in the second half, as depreciation charges would increase with more delivered aircraft and there was no improvement expected in traffic flow. CSA plans to take delivery of five Airbus A320s and two Boeing B737-700s in the second half. The airline said domestic passenger revenue in the first half fell 5.1 per cent from a year earlier to 4.1 billion yuan, or 80 per cent of its total passenger revenue despite a 5.4 per cent rise in domestic passenger volume. The fall was a result of lower air fares.