CHINA Southern Airlines and China Eastern Airlines on Friday both posted a slump in annual profits, hit by rising fuel costs and a weak yuan currency, missing analyst forecasts.

China Southern, the country’s largest carrier by passenger numbers, said its 2018 profit attributable to shareholders fell 49.6 percent to 2.98 billion yuan (US$443.59 million), compared with an average forecast of 3.81 billion yuan based on 19 analysts, according to Refinitiv data.

Revenue rose 12.66 percent on the year to 143.62 billion yuan, in line with growing demand for travel in the world’s fastest-expanding aviation market.

The airline warned that big fluctuations in the yuan this year, along with rising oil prices, were likely to weigh on profits in the year ahead.

Foreign exchange losses amounted to 1.74 billion yuan as the yuan fell against the U.S. dollar in the 12-month period, versus a gain of 1.79 billion yuan a year earlier.

The yuan fell by more than 5 percent against the U.S. dollar last year, pushing up financing costs at airlines which have bought planes with mainly U.S. dollar-denominated loans.

China Eastern, the country’s second-largest carrier by passenger numbers, reported a 57 percent slump in net profit last year to 2.71 billion yuan. It missed the average forecast of 4 billion yuan from 18 analysts, according to Refinitiv data.

Revenue jumped 13 percent year on year to 114.93 billion yuan, the carrier said, while incurring foreign exchange losses of 2 billion yuan in the 12-month period. (SD-Agencies)