In the first six months of this year, China Southern Airline's sales dropped by a significant 10.4 percent from 3.48 billion yuan ($520.9 million) a year earlier to 3.11 billion yuan ($467 million) as China suffers from foreign exchange losses.

Despite seeing its revenue increased by 1.4 percent to 54 billion yuan ($8.08 billion) in the first six months, China Southern Airlines is poised to report losses amounting to as much as 8.5 billion yuan ($1.3 billion), Bloomberg reported.  

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After a rapid currency devaluation of four percent between August and December 2015, the value of the Chinese yuan further dropped to over two percent against the dollars in the first half of this year, resulting in a 1.5 billion yuan ($224.6 million) forex loss for China Southern Airlines during the period compared with a 156 million yuan ($23.3 million) loss in the same period in 2015, according to the South China Morning Post.

To respond to the rapid fluctuations, China Southern Airlines told the Hong Kong stock exchange on Monday that has optimized its currency-related debt structure to cope with the drastic exchange rate fluctuations.

"Through advanced repayment of US dollar liabilities and a swap of US dollar obligations under finance leases, the proportion of US dollar liabilities was reduced," Wang Changshun, airline's chairman, said. "The financing proportion of renminbi increased to 50.8 percent from 31.7 percent at the beginning of the year, therefore the impact of the exchange loss decreased."

Furthermore, the airline said it would break away its policy of not hedging for fuel to revive earnings, according to Business Times. It will only conduct hedging operations when "fuel prices reach the ideal level," the company said in a statement.

China Southern Airlines, the biggest carrier by passengers, currently owns 689 aircrafts and has launched six new international routes.

TagsChina Southern Airlines, aircraft, aviation industry, china, foreign exchange