Weaker profits expected for Chinese airlines
August 31, 2015 Category Travel, Weekly
A weaker yuan may reduce profits of China’s three major airlines, industry experts predict. “The three largest carriers in China could lose between CNY2 billion and CNY4 billion each in net profit this year,” Geoffrey Cheng, head of transportation and industrial research at BOCOM International, which is part of the Bank of Communications, said. “But this year’s decline in fuel prices will help counteract the carriers’ exchange loses,” he added. Airlines’ high dollar-denominated debt will increase because of the cheaper yuan. China Eastern Airlines reported a net profit of CNY3.564 billion in the first half of this year, and Air China one of between CNY3.8 billion and CNY4 billion for the same period. China Southern Airlines has predicted a net profit of between CNY3.4 billion and CNY3.6 billion. But while the fall in the yuan has yet to show up on their books, it has already had an impact on the share prices of airlines on the Shanghai Composite Index. Aviation shares had fallen on average by 2.25% by Aug 14.
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