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China Eastern Profit Tumbles 65% on Fuel Costs, Currency

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Aug. 31 (Bloomberg) -- China Eastern Airlines Corp., the nation’s second-largest carrier by passengers, said first-half profit tumbled 65 percent because of higher fuel costs and currency losses.

Net income fell to 806.9 million yuan ($127 million) from 2.28 billion yuan a year earlier, the Shanghai-based airline said in a Hong Kong stock exchange filing yesterday. That compares with the 786 million-yuan average of three analysts’ estimates in a Bloomberg News survey. Sales rose 5.6 percent to 40.2 billion yuan.

The carrier joins China Southern Airlines Co. and Air China Ltd. in reporting lower profit after its average fuel prices rose 10 percent and traffic growth cooled on the nation’s slowing economy. The company also made a 228 million yuan exchange loss, compared with a year-earlier gain, as the weaker yuan raised the repatriated value of dollar-denominated debts.

The airline fell 1.3 percent to HK$2.36 in Hong Kong trading today. The benchmark Hang Seng Index dropped 0.4 percent.

Passenger numbers rose 4.1 percent to 34.6 million, China Eastern said. That’s compared with a 10 percent increase a year earlier. Load factor, or the percentage of seats filled by paying customers, rose 1.1 percentage points from a year earlier to 79.1 percent.

The Chinese currency weakened 0.95 percent against the dollar in the first six months, according to the China Foreign Exchange Trade System. That was the first half-year decline since 2009.

China Eastern didn’t propose an interim dividend. China Southern reported an 85 percent slump in first-half profit this week while Air China posted a 77 percent drop.

To contact the reporters on this story: Jasmine Wang in Hong Kong at Jwang513@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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