China Southern Airlines reported a first-half net loss of CNY1 billion ($162 million), reversed from a net profit of CNY302 million in the year-ago period. The Guangzhou-based carrier had predicted the net loss in its preliminary earnings statement released in July.

It attributed the losses to the slow recovery of domestic market demand (especially in the Southeast Asian market and Xinjiang market), overcapacity, high-speed rail competition and yuan depreciation.

First-half operating revenue climbed 42% to CNY50 billion while operating expenses jumped 39% to CNY45 billion.

Passenger boardings rose 8% to 47.4 million in the first half with an average load factor of 79.2%, down 1.12 points over the year-ago period. Capacity increased 10% to 98 billion ASKs against a 10% increase in passenger revenue to 78 billion RPKs. Cargo traffic volumes rose 12% to 663,120 tonnes.

China Eastern and Air China reported first-half profit declines for the similar reasons.

Looking to the second half, China Southern said, “Opportunities and challenges would remain,” but the “robust growth of Chinese economy” and “improvement of Chinese people’s life standards” would provide vast market potential for domestic carriers.