BEIJING, July 14 China's flag carrier Air China
Ltd warned on Monday that first-half earnings would
fall as much as 65 percent year on year, saying a depreciating
Chinese currency had driven up its financial costs.
Air China did not specify its financial cost for the
January-June period but said its net income would be 55-65
percent less than the 1.12 billion yuan ($180.5 million) it
booked for the same period a year ago.
Rival China Southern Airlines Co Ltd warned on
Friday it could post a loss of up to 1.1 billion yuan for the
first half, which it attributed to a weaker yuan and a slowing
economy. That compared with a year-ago net profit of 302 million
The currency issue also is expected to hurt China Eastern
Airlines Corp Ltd, which has yet to provide earnings
guidance, industry observers say.
Chinese airlines used to end up with huge currency gains
thanks to a strong yuan, partly because the aircraft they order
from Boeing Co and Airbus Group NV are settled
In recent months, however, Beijing allowed the yuan to slide
to punish speculators, increasing volatility in the market.
From January to June, the yuan depreciated 2.4
percent against the dollar.
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 debts.
Air China's Shanghai-traded stocks closed up 0.6 percent on
Monday, slightly lagging a 0.96 percent gain by the benchmark
($1 = 6.2059 Chinese Yuan)
(Reporting by Fang Yan and Matthew Miller in BEIJING; editing
by Jane Baird)