October 26, 2018 / 11:26 AM / a month ago

China Eastern Airlines' third quarter profit slumps 38 pct

BEIJING, Oct 26 (Reuters) - China Eastern Airlines Corp Ltd reported a 38 percent drop in third-quarter net profit on Friday, dragged down by a weakening yuan and rising fuel and debt costs.

While Chinese airlines have seen revenue surge in tandem with growing travel demand, their costs have been recently by rebounding oil prices and a volatile currency.

China Eastern - the country’s second-largest carrier by passenger numbers - said net profit attributable to shareholders dropped to 2.2 billion yuan ($317 million) in the July-to-September period, from 3.6 billion yuan a year earlier, although revenue rose 13.5 percent to 33.5 billion yuan.

For the first nine months of the year, net profit was down 43.3 percent from a year earlier to 4.5 billion yuan.

The yuan has fallen by about 6 percent against the U.S. dollar since the start of this year, pushing up financing costs at airlines which have bought planes with mainly U.S. dollar-denominated loans.

China Eastern reported 2.2 billion yuan in foreign exchange losses for the first three quarters, as the Chinese currency depreciated against the dollar.

The airline said in a separate announcement that it plans to issue up to 15.4 billion yuan in corporate bonds to fund aircraft purchases and replenish working capital.

In July, China Eastern announced that it would raise up to $2.23 billion in a share sale to expand its fleet and to replenish working capital. Shanghai-based Juneyao Airlines Co Ltd invested in the state carrier as part of the deal. ($1 = 6.9446 Chinese yuan renminbi)

Reporting by Stella Qiu and Brenda Goh; Editing by Christopher Cushing and Susan Fenton

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