Hainan Airlines posted a net loss in the second quarter and warned it might remain in the red for the third as fuel costs soared. 

China's Hainan Airlines Co. Ltd. , part-owned by global financier George Soros, posted on Tuesday a net loss in the second quarter and warned it might remain in the red for the third as fuel costs soared.

The airline, which operates from the sun-drenched southern resort island of Hainan, lost 3.41 million yuan ($421,200) from April to June versus a profit of 34.25 million yuan a year ago, based on Reuters' calculations from previously available figures.

"Rising fuel prices pushed up costs and squeezed margins," the carrier added.

The airline carried 5.8 million passengers in the first half, up 16 percent from a year earlier, it said in a statement posted on the Shanghai Stock Exchange's Web site (www.sse.com.cn).

And second-quarter turnover rose 19.8 percent to 2.35 billion yuan on higher traffic flows. But Hainan Air forecast a net loss -- or a significant year-on-year profit fall -- for the third quarter.

Hainan Air now flies mainly to Chinese destinations, but has expanded its network to include Bangkok, Kuala Lumpur, Osaka and Budapest.       

The chairman of Hainan Air's parent told Reuters in March that the carrier was looking at doubling its fleet size to 200 aircraft by 2010 and would change its name to Grand China Air by the end of this year, after absorbing three smaller airlines.

Rival China Southern Airlines , China's biggest carrier by fleet size, posted a net loss of 907 million yuan for the first half of 2005, hit hard by soaring fuel costs and domestic price wars.

China Eastern Airlines Corp. Ltd. on Tuesday reported a net loss of 471.4 million yuan for the six-month period, also blamed on fuel expenses.

Hainan Air's shares lost more than a fifth of their value in the second quarter, underperforming the market's 8.5 percent slide. ($1=8.095 Yuan)

(CRIENGLISH.com August 30, 2005)