Weaker Yuan Hurting Chinese Airlines
A weakening Chinese yuan has made purchases of foreign products and services more expensive for the country's airlines.
As the U.S. expressed “concern” on Tuesday over the devaluation of China’s currency, making its exports cheaper but reducing the buying power of Chinese consumers, Chinese airlines continued to feel the pain of a weaker yuan as the value of their foreign debt rose with the relative strengthening of the U.S. dollar. China Southern Airlines, for one, on Tuesday issued a profit warning report estimating a first-quarter net loss resulting from downward foreign exchange fluctuations. China’s largest airline by revenue said it would likely lose between 300 million yuan ($48.55 million) and 350 million yuan ($56.65 million) during the period, compared with a net profit of 57 million yuan ($9.22 million) during last year’s first quarter.
