China Eastern Airlines issued (13-Jul-2012) a profit warning, estimating 1H2012 net profit to have declined by more than 50%. The carrier said the weaker results were due to weak passenger and cargo demand and higher jet fuel costs. The carrier is forecast a net profit of CNY2451.73 million (USD383.89 million) in the six months to Jun-2012 and a basic earnings per share of CNY0.2174 (USD 3.40 cents). Last week, China Southern Airlines similarly forecast (10-Jul-2012) a 50% year-on-year decline in net profit due to factors including the slowdown in the domestic economic growth and the growth of demand for aviation industry, the “substantial” increase in jet fuel prices and the foreign exchange losses attributable to the depreciation of the Chinese yuan against the US dollar. In 1H2011, the carrier reported a net profit of CNY2755 million (USD421.8 million) and an earnings per share of CNY0.28 (USD 4.29 cents), according to China Accounting Standards for Business Enterprises. [more - original PR - China Eastern Airlines] [more - original PR - China Southern Airlines]
China Eastern Airlines: "The slowdown in the growth of the demand in the civil aviation market of passenger traffic arising from global economic recession and the inadequate demand in the international cargo traffic market in the period from January to June 2012 affected the growth of the air transportation business of the Company. Meanwhile, the year-on-year growth in the price of jet fuel resulted in an increase in the operating costs of the Company. Furthermore, as the exchange rate of Renminbi remained relatively stable during the period from January to June 2012, the exchange gain of the Company for this period was significantly lower than the figure recorded in the corresponding period last year." Source: Company statement, 13-Jul-2012.