(Yicai Global) Aug. 29 -- The dual downdrafts of higher international oil prices and yuan depreciation have pushed the net profit of China Southern Airlines into a 23 percent annual nosedive to USD2.1 billion. Uncertainty gripping the global economy and downward pressure on China's economy resulting from China-US trade turbulence combined to cause the carrier's performance to 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. It transported 67.35 million passengers in the first half, a rise of 11.2 percent annually. The average passenger load factor was 82.44 percent, with a yearly increase of 0.13 percent. This standard gauges the capacity utilization of airlines and evaluates how efficiently a carrier fills seats and generates revenue from fares, public information shows.

The company's revenue for the first half was CNY67.6 billion (USD9.9 billion), an annual rise of 12 percent. Fuel was its highest cost as international oil price swings impacted its performance. CSAir's forked out USD2.84 billion for fuel in an annualized increase of 26 percent, per the company's first-half performance report issued yesterday.

Oil prices aside, fluctuations in the yuan exchange rate were also pivotal in the company's subdued showing, as airlines settle in foreign currencies when buying and leasing planes and purchasing fuel in foreign airports.

CSAir's expenses in the first half were USD300 million, up by USD160 million per year. This includes a net foreign exchange loss of USD61.5 million, whereas it netted a forex windfall of USD82.2 million the same time last year, a disparity mainly due to the redback's slide against the dollar, which alone took a more than USD147 million bite out of the carrier's net profit.

The firm gained net profit of USD373 million in the first quarter, while that for the first half was USD313 million, a yearly increase of 64.1 percent, meaning CSAir booked a net loss of USD60 million in the second quarter.

China's domestic civil aviation market is in a rapid growth trajectory, buoyed by rising market demand. Overall passenger numbers are expected to keep growing at over 10 percent this year, with the number of passengers projected to reach 612 million.

Editor: Ben Armour