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China Eastern Airlines' third quarter profit slumps 38%
[BEIJING] China Eastern Airlines Corp Ltd reported a 38 per cent drop in third-quarter net profit on Friday, dragged down by a weakening yuan and rising fuel and debt costs.
While Chinese airlines have seen revenue surge in tandem with growing travel demand, their costs have been recently by rebounding oil prices and a volatile currency.
China Eastern - the country's second-largest carrier by passenger numbers - said net profit attributable to shareholders dropped to 2.2 billion yuan (S$437.7 million) in the July-to-September period, from 3.6 billion yuan a year earlier, although revenue rose 13.5 percent to 33.5 billion yuan.
For the first nine months of the year, net profit was down 43.3 perc ent from a year earlier to 4.5 billion yuan.
The yuan has fallen by about 6 per cent against the US dollar since the start of this year, pushing up financing costs at airlines which have bought planes with mainly US dollar-denominated loans.
China Eastern reported 2.2 billion yuan in foreign exchange losses for the first three quarters, as the Chinese currency depreciated against the dollar.
The airline said in a separate announcement that it plans to issue up to 15.4 billion yuan in corporate bonds to fund aircraft purchases and replenish working capital.
In July, China Eastern announced that it would raise up to $2.23 billion in a share sale to expand its fleet and to replenish working capital. Shanghai-based Juneyao Airlines Co Ltd invested in the state carrier as part of the deal.