(Yicai Global) Aug. 29 -- The dual downdraftsof higher international oil prices and yuan depreciation have pushed the net profit of China Southern Airlines into a23percent annual nosedive to USD2.1 billion. Uncertainty gripping theglobal economy and downward pressure on China's economy resulting fromChina-US trade turbulence combined tocausethe carrier's performanceto descend in the second half.

CSAir is Asia's largest airline in fleet size and passenger numbers. Up to the end of the reporting period, the company had 786 aircraft. Ittransported67.35 millionpassengers in the first half, arise of 11.2percent annually. The average passenger load factor was 82.44 percent, with a yearlyincrease of 0.13 percent.Thisstandard gaugesthe capacity utilization of airlinesandevaluateshow efficiently acarrier fills seats and generates revenuefrom fares, public information shows.

The company's revenue for the first halfwas CNY67.6billion (USD9.9billion), anannual rise of 12percent. Fuel wasitshighest costasinternational oil priceswings impactedits performance. CSAir's forked out USD2.84 billionfor fuel inan annualizedincrease of 26percent, per the company's first-half performance report issued yesterday.

Oil pricesaside, fluctuations in the yuanexchange rate werealso pivotalinthe company's subdued showing, as airlines settle in foreign currencieswhenbuyingandleasing planesand purchasing fuelin foreign airports.

CSAir's expenses in the first half were USD300 million, up byUSD160 millionper year. Thisincludes a net foreign exchange loss of USD61.5 million, whereasit netteda forex windfallof USD82.2 million the same timelast year, adisparitymainly due to the redback'sslideagainst the dollar, which alone took a more thanUSD147 millionbite out of the carrier's net profit.

The firmgainednet profit of USD373millionin the first quarter, whilethatfor the first half was USD313 million, a yearlyincrease of 64.1 percent, meaningCSAir booked a net loss of USD60 million in the second quarter.

China's domestic civil aviation market is ina rapid growthtrajectory, buoyed by rising market demand. Overall passenger numbersare expectedto keep growingatover 10 percent this year, withthe number of passengers projected to reach 612 million.

Editor: Ben Armour