(Corrects to say China’s largest carrier, not second largest, in second para)
SHANGHAI, March 30 (Reuters) - China Southern Airlines Co Ltd on Thursday reported a 29.9 percent rise in 2016 net profit, below analysts’ expectations, as a weaker yuan put a dent on strong domestic demand for overseas travel.
China’s largest carrier by passenger numbers reported profits attributable to shareholders of 5.06 billion yuan ($734.50 million), its strongest performance since 2011. Analysts polled by Reuters had forecast reported net income of 5.47 billion yuan.
Revenue rose 2.95 percent year-on-year to 114.8 billion yuan, against a 4.75 percent rise in passenger traffic, it said. It suffered 3.27 billion yuan in foreign exchange losses due to the weakening yuan.
Its yield per revenue passenger kilometre fell 5.66 percent, after the airline grew passenger capacity by 8.65 percent over the year.
Chinese airlines have been aggressively ordering new aircraft to take advantage of strong demand for outbound travel, which has outpaced domestic growth. However, the loans to purchase the aircraft are mainly denominated in U.S. dollars, causing them losses as the yuan depreciated against the dollar.
China is the world’s fastest growing aviation market and is expected to displace the United States as the world’s largest around 2024, according to the International Air Transport Association.
Shares in China Southern, which earlier this week announced that it will sell a 2.68 percent stake to American Airlines Group Inc, closed down 3.49 percent on Thursday, against a 0.37 percent fall in the Hang Seng index. ($1 = 6.8890 Chinese yuan renminbi) (Reporting by Brenda Goh; Editing by Randy Fabi)