SHANGHAI, March 30 (Reuters) - Air China on Thursday reported a 0.6 percent rise in 2016 net profit, underperforming analyst expectations as earnings were hit by the weakening yuan and rising costs.
The company’s profit attributable to shareholders of 6.8 billion yuan ($987.22 million) fell short of forecasts from analysts, who expected China’s flag carrier to report full-year reported net income of 7.35 billion yuan, according to 8 analysts polled by Thomson Reuters.
Revenue rose 4.6 percent year-on-year to 114 billion yuan, it said. It made 4.2 billion yuan in foreign exchange losses due to the yuan’s depreciation against the dollar over the year.
Operating costs overall rose 4.2 percent, although its fuel bill, which accounts for about a quarter of its costs, fell 8.6 percent. It also increased passenger capacity by 8.6 percent over the year, while its revenue made per passenger for one kilometre fell 4.4 percent.
Chinese airlines have been ordering new aircraft to take advantage of strong demand in the country for foreign travel but many of these orders were made with U.S dollar-denominated loans.
The carrier’s rival, China Eastern Airlines reported a 0.7 percent fall in full-year profits on Thursday, its first drop since 2013. It experienced foreign exchange losses of 3.54 billion yuan.
China Southern Airlines, the country’s largest carrier by passenger numbers, on Thursday reported a 30 percent rise in net profit.
Shares in Air China closed 2.17 percent down on Wednesday, against a 0.37 fall in the Hang Seng index. ($1 = 6.8880 Chinese yuan renminbi) (Reporting by Brenda Goh. Editing by Jane Merriman)