HONG KONG Aug 26 China's flagship carrier Air
China Ltd said on Tuesday first-half net
profit fell 58 percent, weighed down by a depreciating yuan that
increased financial costs.
Air China said net income fell to 474.4 million yuan ($77
million), compared with 1.12 billion yuan it booked for the same
period a year ago.
The Beijing-based carrier said foreign exchange net losses
for the first six months of the year amounted to 721 million
yuan ($117.19 million), compared with foreign exchange net
earnings of 1.12 billion yuan for the same period last year.
In July, the company warned its first-half earnings would
fall as much as 65 percent year-on-year.
Chinese airlines used to have huge currency gains thanks to
a strong yuan, partly because aircraft they order from Boeing Co
and Airbus Group NV are settled in dollars.
In recent months, however, Beijing allowed the yuan to slide
to punish speculators, increasing volatility in the market.
With the end of the yuan's consistent appreciation against
the dollar, carriers have been challenged on two fronts --
operating costs and foreign currency-denominated debt.
Air China's Hong Kong-listed shares closed down 1.8 percent
on Friday ahead of the earnings result, lagging a 0.4 percent
fall for the broader market.
(1 US dollar = 6.1522 Chinese yuan)
(Reporting By Fang Yan and Matthew Miller, editing by David