ZCZC
BCN-45
CHINA-AVIATION-COMPANY-AIRCHINA-EARNING
Chinese airlines’ profit hit by fuel costs, weak yuan
SHANGHAI, Aug 31, 2018 (BSS/AFP) – China’s major airlines mostly saw their
earnings battered in the first half of the year as a weaker Chinese yuan and
higher fuel prices offset steadily rising passenger traffic.
Net profit at China Eastern Airlines for January-June plunged 48 percent
on-year to 2.3 billion yuan ($337 million), the company said Thursday in a
statement to the Hong Kong stock exchange, where it is listed.
“China’s civil aviation industry continued to maintain a rapid, above
double-digit growth rate, yet also faced challenges such as a sharp rise in
fuel prices, large fluctuations in … exchange rates and intensifying market
competition,” the Shanghai-based carrier said.
China Southern Airlines, Asia’s largest carrier, said earlier in the week
that profit slumped 24 percent to 2.1 billion yuan. However, it said revenue
grew 12 percent and it posted similar gains in passenger numbers, the latest
in what has become routinely good news in the underlying business of Chinese
airlines.
Flag carrier Air China bucked the trend, posting a 4.05 percent profit
gain to 3.5 billion yuan.
Air China noted, however, that fast growth in transport capacity may have
outpaced demand during the period.
The three government-controlled airlines have ramped up their presence in
the booming domestic market after previously expanding overseas routes.
China is now the world’s second-largest aviation market, and increasing
demand for air travel among its growing middle class is expected to
ultimately push it past the United States.
Last year, American Airlines, the world largest carrier by scheduled
passengers, bought $200 million worth of China Southern stock, or 8.8 percent
of its Hong Kong-listed shares, to seal a planned “long-term relationship”.
The tie-up will allow American to tap into the Chinese market, while
boosting China Southern’s ambitions of raising its global profile.
BSS/AFP/HR/1405