Airlines gain as yuan appreciates

Foreign exchange gain became a major profit source for Chinese airlines in the first half of the year as they continue to be saddled with surging fuel costs, waning passenger demand and fierce competition.

But the country's previously buoyant airline industry could face an even worse outlook in the remaining part of the year as analysts expect the pace of the Chinese yuan appreciation to significantly slow down.

China's three largest airline groups reported an aggregate operating loss of 2.58 billion yuan in the first half of the year. But the renminbi appreciation against the US dollar yielded a foreign exchange gain of 6.45 billion yuan for the three carriers, up 125 percent over the same period last year. Renminbi appreciated by about 6 percent against the US dollar in the year's first six months.