Air China Ltd said its net profit in the first half fell 1.38 percent from a year ago to 1.28 billion yuan ($187.11 million) under Chinese accounting standards due mainly to higher jet fuel prices and lower passenger traffic.
In its interim report filed with the Shanghai Stock Exchange, the airline said that operating revenue in the first six months rose 13.26 percent from a year ago to 25.76 billion yuan.
Passenger revenue rose 5.35 percent to 21.75 billion yuan, while cargo revenue was up 88.54 percent to 3.7 billion yuan, the airline said.
Operating costs, which mainly include jet fuel expenses, also rose 20.73 percent year-on-year to 23.134 billion yuan. Marketing costs and management expenses rose 17.49 percent and 34.27 percent respectively to 1.61 billion yuan and 673 million yuan.
The Beijing-based airline booked a gain of 996.33 million yuan from the appreciation of the yuan currency in the half, against a loss of 126.79 million a year earlier.
In the January-June period, the airline carried 17.6 million passengers, down 1.49 percent from a year earlier, and 505,200 tons of mail and cargo, down 5.69 percent.
The airline said passenger load factor in the first half was 75.08 percent, down 0.76 percentage point from a year ago. Its cargo load factor was 58.69 percent, against 53.11 percent a year earlier.
Earnings per share under Chinese accounting standards stood at 0.11 yuan, unchanged from a year earlier.
Under international accounting rules, net profit fell to 1.24 billion yuan from 1.57 billion yuan a year earlier.
Looking ahead, the company said China's economy will maintain stable growth in the second half of the year, although market uncertainties remain.
Economic development after the Olympic Games and weekend charter flights linking the China mainland with Taiwan will bring more opportunities for increased air traffic, the airline said.
Air China did not forecast earnings for the rest of the year.
But it could be helped by an increase in jet fuel surcharges that went into effect on July 1 to offset the impact of higher jet fuel costs. China raised fuel surcharges on domestic routes by 20 yuan to a total of 80 yuan per passenger on flights of less than 800 kilometers and by 50 yuan to a total of 150 yuan on long-haul flights.