Air China profit drops in H1

Air China Ltd, one of China’s three major airlines, said on Tuesday that its operating profit dropped 78.92 percent in the first half of the year compared with the same period last year.

Net profit attributable to equity holders decreased 73.87 percent.

Losses in the investment in Cathay Pacific Airways Ltd were one of the major reasons behind the decrease in net profit. Returns on the investment in Cathay Pacific Airways dropped from 867 million yuan in the same period last year to 15 million yuan, a 98.3 percent decrease.

Fluctuation in the value of the yuan was another major reason behind the lackluster results. The yuan depreciated 0.89 percent in the second quarter, resulting in a 341 million yuan net exchange loss. In the same period last year, with the yuan rising against the US dollar, the company got 1.5 billion yuan in foreign exchange gains, according to a Caijing.com.cn report on Wednesday.

The fierce competition between airlines and the hikes in oil prices also had a negative effect on the company’s performance. Air China said that the operating environment in the latter half of the year may continue to be challenging.

China Southern Airlines Co Ltd, the country’s largest airline by passenger numbers, reported an 83.7 percent drop in net profit this week, despite a 13.2 percent increase in operating revenue.