Air China reported a first-half net profit of CNY510 million ($82.7 million), down 55% compared with a net income of CNY1.14 billion in the year-ago period. The Beijing-based carrier had predicted in July its first-half net profits would plummet 55% to 65% year-over-year.

First-half operating revenue increased 8.5% to CNY50 billion while operating expenses increased 6.7% to CNY48 billion.

Air China, which said exchange rates were the main culprit for the results, reported exchange losses of CNY721 million.

Passenger boardings climbed 7.2% to 40.14 million with an average load factor of 81%, down 0.52 point year-over-year. Passenger capacity grew 11.24% to 93.13 billion ASKs while passenger revenue rose 10.5% to 75.05 billion RPKs. Cargo capacity jumped 15% to 4.75 billion AFTKs against an increase of 8.3% in cargo revenue to 2.56 billion RFTKs.

In the first half, Air China took delivery of 28 aircraft and phased out 13. It currently operates 512 aircraft with an average fleet age of 6.22 years.

Looking ahead, the carrier said it expects China’s economy to stabilize. “China’s economy is likely to continue a trend of overall stable development. We expect that the passenger aviation business will maintain the growth observed in the first half of the year and the cargo business is likely to continue to improve,” Air China chairman Cai Jianjiang said. But he also warned challenges still remain as “the industry should continue to face intensified internal and external competition, while exchange rates and oil prices remain uncertain.”