BEIJING, April 15 China Southern Airlines
, China's biggest airline by fleet size,
has warned it will incur a net loss of between 300-350 million
yuan ($46-$56 million) in the first quarter due to foreign
The airline said in a statement to the Shanghai Stock
Exchange on Tuesday that a fall in the yuan had increased
its costs, pushing it into the red in the first three months of
The warning makes China Southern the latest Chinese airline
to suffer from a fluctuating yuan, a phenomenon still novel in
China where authorities for years ensured the currency
experienced minimal daily volatility to protect local firms.
As China tries to re-make its economy to allow market forces
to play a bigger role in a bid to reduce inefficient investment,
the government wants to gradually relax its grip on the yuan.
Last month, the central bank doubled the yuan's maximum daily
trading band to 2 percent.
The yuan has fallen 2.8 percent so far this year, compared
with a 2.8 percent rise in 2013. Although the sizes of the moves
are not big, analysts say they are still a challenge for Chinese
firms, which are not used to hedging currencies.
Other airlines including China's flagship carrier Air China
Ltd and Hainan Airlines Co Ltd have also
warned earnings will suffer from a weaker yuan.
Rising currency risks come at a time when Chinese carriers
are already grappling with half-empty premier cabins due to the
government's austerity drive.
($1 = 6.2191 Chinese Yuan)
(Reporting by Koh Gui Qing; Editing by Mark Potter)