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Air China profit drops in first quarter as oil rises, yuan weakens
April 27, 2017 / 3:27 PM / 9 months ago

Air China profit drops in first quarter as oil rises, yuan weakens

SHANGHAI, April 27 (Reuters) - Air China’s net profit fell 40 percent in the first three months of 2017, hit by rising oil prices and weakness in the yuan.

China’s flag carrier on Thursday posted profit attributable to shareholders of 1.47 billion yuan ($213 million) for January to March, down from 2.4 billion yuan during the same period last year.

Its rival China Eastern Airlines said net profit attributable to shareholders was 2.82 billion yuan for the quarter, up from 2.6 billion yuan a year earlier.

The fortunes of China’s largest airlines have risen with the ascent of the Chinese traveller, whose demand for overseas trips have helped make it the world’s fastest growing aviation market.

However, the airlines took many U.S. dollar-denominated loans to buy planes as part of an ambitious fleet expansion, exposing them to the depreciation of the yuan which lost 6.6 percent of its value against the dollar last year.

Oil prices, which plunged in recent years, have also started to firm, causing jet fuel costs to begin to rise.

The 2016 full-year results of China’s three largest airlines missed analyst expectations last month and some analysts are predicting that earnings have peaked. ($1 = 6.8958 Chinese yuan renminbi) (Reporting by Brenda Goh; editing by Alexander Smith)

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