April 27 (Bloomberg) -- Air China Ltd., the world’s largest carrier by market value, and China Southern Airlines Co. both said first-quarter profit plunged because of smaller foreign-exchange gains, higher fuel prices and slower economic growth.
Air China’s net income tumbled 86 percent to 239 million yuan ($38 million), and China Southern reported a 74 percent drop to 319 million yuan. The carriers released earnings statements to the Hong Kong stock exchange yesterday.
The airlines both filled a smaller percentage of seats in the period than a year earlier as fleet expansion outpaced cooling travel demand. They also booked smaller currency gains after the yuan halted advances against the dollar that had pared the value of debts from buying planes.
Air China’s currency gains were 586 million yuan less than a year earlier, it said. The Beijing-based airline’s sales rose 7.7 percent to 22.9 billion yuan.
The yuan posted its first quarterly decline since 2009 in the three months ended March as China’s economy expanded at the slowest pace in almost three years. Airlines also had to contend with fuel prices that averaged 9.1 percent higher than a year earlier in Singapore trading.
China Southern, the nation’s biggest carrier by passenger numbers, has dropped 12 percent this year in Hong Kong trading. Air China, part-owned by Cathay Pacific Airways Ltd., has slipped 11 percent.
Air China will sell 188.6 million shares to its parent at 5.57 yuan each, raising 1.05 billion, according to a Shanghai Stock Exchange filing. The stock will resume trading in Shanghai today. Its last trading day was April 19.
China Eastern Airlines Corp., the nation’s second-biggest carrier, has said that its profit probably fell more than 50 percent in the first quarter.
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