Economic slowdown, railways hold back airlines

Revenue falls for nation's top two carriers

Slower economic growth and competition from high-speed railways were a drag on the first-half performance of domestic airlines, though there was wide divergence in the sector, the carriers' interim reports show.

On Monday, China Southern Airlines Co Ltd became the first carrier among the nation's top three to report first-half results.

China Southern Airlines Co Ltd saw revenue slip 4.2 percent year-on-year to 46 billion yuan ($7.5 billion), while net profit tumbled 32.7 percent to 302 million yuan, the third decline in a row. [provided to China Daily]

The Guangzhou-based carrier saw revenue slip 4.2 percent year-on-year to 46 billion yuan ($7.5 billion), while net profit tumbled 32.7 percent to 302 million yuan, the third decline in a row.

In contrast, Beijing-based Air China Ltd, which released its interim report a day later, said net profit rose 7.31 percent to 1.1 billion yuan, ending a two-year decline. Revenue, however, fell 3.58 percent to 45.9 billion yuan.

Both airlines benefited from the yuan's appreciation against the dollar, which yielded foreign-exchange gains of 1.44 billion yuan for China Southern and 1.12 billion yuan for Air China.

Cheaper jet fuel saved money for both, cutting fuel costs for China Southern by 7.6 percent and for Air China by 8.1 percent.

But the shift from the business tax to the value-added tax offset lower fuel costs, pushing up both carriers' overall fuel cost a bit.