China Southern Air Q3 profit falls following fluctuations in currency
October 30, 2012, 12:00 pm TWN
HONG KONG -- China Southern Airlines Ltd. says quarterly profit dropped by nearly a third because of currency fluctuations.
China's biggest airline by passenger numbers said late Sunday that profit fell by 29 percent to 2.2 billion yuan (US$352 million) or 0.23 yuan per share (3.7 cents) in the third quarter.
The airline, which is based in the southern city of Guangzhou, said finance expenses in the quarter amounted to 518 million yuan as China's currency weakened against the U.S. dollar. The company posted a net gain of 764 million yuan in the same period last year because the yuan was strengthening at the time.
Chinese airlines are vulnerable to exchange rate fluctuations because they earn mostly in yuan but have to pay for major costs like aircraft and jet fuel in U.S. dollars.
China Southern said in February that it was buying 10 Boeing B777-300ER jets worth US$298 million, though it said it was getting a big discount to the list price.
The state-owned airline and its two big rivals, China Eastern Airlines and Air China, have also been hit by slowing demand for air travel and higher jet fuel prices.
The unaudited results were prepared in line with Chinese accounting standards.