China flag carrier reports 77% slump in profit

Flag carrier Air China said Tuesday that its net profit plunged 77 percent in the first half from a year ago, hit by weakness in air travel demand and higher fuel costs.

The airline said net profit was 944.52 million yuan ($150 million) in the first half, down from 4.06 billion yuan in the same period last year, according to a statement to the Shanghai stock exchange.

"Global economic growth is gradually slowing, fuel prices are still high, the air transport industry is facing weak demand," the statement said in explaining the drop in profit.

Air China still carried more than 34 million passengers in the first six months of this year, up over three percent from the same period last year.

The airline said the operating environment for the second half of this year remained "grim", citing fuel costs and exchange rate fluctuations.

In the first half the company's fuel spending rose 12.8 percent year-on-year, the statement said.

Air China also recorded a 341 million yuan foreign exchange loss in the first half, compared with a gain of 1.48 billion yuan for the same period last year, as the Chinese currency depreciated against the US dollar, it said.

Another of the country's biggest carriers, China Southern Airlines, on Tuesday reported an 85 percent slump in first-half net profit.

Guangzhou-based China Southern attributed the fall for the first six months to high fuel costs, fluctuating exchange rates and intense competition.