High fuel prices drag down profits for China's largest carriers

Air China Ltd. and China Southern Airlines Co., the country's two largest air carriers, both announced Friday that their first quarter profits slumped due to high fuel costs, smaller foreign exchange gains and low investment returns.

Air China's net profits plunged 86 percent year-on-year to 239.1 million yuan ($37.94 million), despite a 7.7-percent increase in revenues to 22.89 billion yuan, according to the company's quarterly report filed with the Shanghai Stock Exchange.

China Southern posted a 74-percent decline to 319 million yuan in net profits, although its revenues jumped 16 percent to 23.69 billion yuan during the first quarter, the carrier's quarterly report showed.

The two carriers said they are facing mounting pressures this year, as the slowing domestic economy may cool travel demand and rising fuel prices will add to operational costs.

China Eastern Airlines Corp., another leading carrier, said its net income will likely retreat more than 50 percent during the first quarter.

Air China's Shanghai-listed shares rose 1.28 percent to open at 6.33 yuan per share on Friday, while China Southern's shares edged down 0.6 percent to open at 4.87 yuan.

Copyright 2012 Xinhua News Agency