October 30, 2018 / 9:49 AM / a month ago

China Southern Airlines profit halves as weaker yuan, higher fuel costs weigh

BEIJING, Oct 30 (Reuters) - China Southern Airlines Co Ltd said on Tuesday its quarterly net profit more than halved, weighed down by a drop in yuan and higher fuel and debt costs.

China’s airlines have been hit by rebounding oil prices and a volatile currency, which have pressured their earnings even as they enjoy strong travel demand.

China Southern Airlines - the country’s largest carrier by passenger numbers - reported profit attributable to shareholders of 2.0 billion yuan ($287.42 million) for the third quarter, down from 4.3 billion yuan in the same period last year.

Net profit was down 41 percent for the first nine months of the year at 4.2 billion yuan, though revenue rose 13 percent to 108.9 billion yuan in the period.

The company incurred foreign exchange losses of 2.0 billion yuan due to a drop in yuan against the U.S. dollar in the nine-month period, compared with a gain of 1.2 billion yuan a year earlier.

The yuan has fallen by about 6 percent against the dollar since the start of the year, raising airlines’ financing costs as their fleet expansion plans have been mostly financed by U.S. dollar-denominated loans.

China Eastern Airlines Corp Ltd, the country’s second-largest airline by passenger numbers, on Friday posted a 38 percent fall in third-quarter net profit. [nL3N1WZ485 ($1 = 6.9584 Chinese yuan)

Reporting by Stella Qiu and Brenda Goh; Editing by Christopher Cushing, Amrutha Gayathri

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