Home > > Air China’s Profits Drop 55% in First Half of 2014

Air China’s Profits Drop 55% in First Half of 2014

08/27/2014| 7:43:45 PM|

Air China Ltd., the country’s largest airline by market value, posted a 55.4 percent drop in profit in the first six months of the year as a weaker yuan inflated overseas debt payments.

Net income declined to 510 million yuan ($82.9 million) in the six months ended in June from a year ago based on international accounting standards, the Chinese flag carrier said in a statement to the Shanghai stock exchange. The profit was in line with the 55 percent to 65 percent decline forecast by Air China on July 14.

The yuan fell more than 2 percent against the dollar in the first half of this year, driving up costs for Air China, which has 70 percent of its debt denominated in the greenback. Foreign exchange losses are expected to also weigh on the earnings of China Eastern Airlines Corp. and China Southern Airlines Co., which are slated to report first-half results later this week.

“Chinese airlines’ earnings are very sensitive to the CNY- USD exchange rate,” Patrick Xu, a Hong Kong-based airline analyst with Barclays, said in a note dated Aug. 20. “The earnings impact mainly comes from marking-to-market U.S. dollar- denominated debt and hence is mostly non-cash.”

Air China fell 1.8 percent to close at HK$4.88 in Hong Kong before the earnings announcement. The stock has dropped 16 percent this year, compared to a 7.6 percent gain in the benchmark Hang Seng Index.

Air China’s yield, a measure of sales per seat per passenger mile, declined 1.7 percent to 0.59 yuan, the country’s third-largest airline by volume said in the statement. The Beijing-based carrier served 40.14 million passengers in the first six months, 7.2 percent more than a year earlier.

Read the original article

TAGS: Air China | financial results
©2017 广州力矩资讯科技有限公司 粤ICP备06070077号-2
Tell us more about yourself!