China Southern Airlines warns of Q1 loss
China Southern Airlines, the country's largest carrier by fleet size, warned of a loss of more than $50 million in the first three months of the year as it was hit by exchange losses cause by a weaker yuan.
In a filing to the Hong Kong Stock Exchange the firm said it would lose 300-350 million yuan ($48.2-$56.3 million) in January-March. That compares with a net profit of 57 million yuan in the same period last year, the filing said.
"The financial expenses of the company substantially increased as compared with the corresponding period of 2013 due to the exchange losses... resulting from the substantial depreciation of renminbi," the company said, referring to the unit's other name.
The yuan -- which China's central bank allows to rise and fall only within a controlled band -- slid in March its lowest level against the dollar in nearly 13 months. Analysts have said Beijing has moved to weaken the currency to control speculative funds betting on its continued rise.
The US Treasury on Tuesday warned that the recent fall of yuan could "raise particularly serious concerns" if it represents a reversal in Beijing's commitment to a more free-floating currency. However, it did say China was no a manipulator.
A weak yuan adds pressure to the bottom lines of Chinese airlines that depend on debt measured in foreign currencies, particularly in US dollars, to finance purchases of new aircraft.
China Southern's Hong Kong-listed shares closed 1.62 percent down at HK$2.43 Wednesday, while the benchmark Hang Seng Index was up 0.11 percent.
