Air China’s profit this year drops 22.26% due to RMB devaluation
Air China has reported a net profit of 3.157 billion RMB a 22.26% drop due to devaluation of the RMB.
Air China has reported a net profit of 3.157 billion RMB from January to September. This is a 22.26% (2.267 billion RMB) drop compared with the same period last year. The airlines says the devaluation of the RMB is the main reason for this loss.
In the first half of the year, Air China’s net profit was only 474 million RMB, a 57.60% decrease from the same period last year. A big reason for this sudden loss was the devaluation of the RMB against the US dollar last year. Corporate currency exchange losses were 721 million RMB. However, in June the RMB-US$ exchange rate appreciated and this improved the financial performance of Air China.
In the third quarter Air China reported that after deducting exchange rate losses operating profit had actually risen 410 million RMB. The main reasons given for the improvement was increased operating efficiency and a drop in fuel price. In 2014 Q3 the reported operational revenue was 29.794 million RMB, a 6.68% increase from in 2013 Q3. Operational costs were 23.018 million RMB, an 8.30% increase from 2013 Q3.
Currently, customer demand isn’t high enough for the Chinese airlines to raise the price of air tickets to the same level as last year. The Chinese government’s anti-corruption policies have also affected demand in the domestic flight market. This year the international flight market has been more active than the domestic fight market.
Recently, Air China has introduced the fuel-efficient Boeing 747-8 type aircraft to their fleet. By the end of 2015 Air China plans to introduce 7 Boeing 747-8 type aircraft as well as more 777-300ER and 330 passenger type aircraft to their fleet.(Translation by David)