China Southern Air narrows loss
China Southern Airlines Co., the country's biggest carrier, said its first-quarter loss narrowed 69 percent because of lower fuel costs and higher surcharges. Updated: 2007-04-26 09:27
China Southern flew about a third of all Chinese airline passengers in the first quarter, as it boosted traveler numbers 17 percent and began receiving 68 new planes this year. The government has also cut jet fuel prices three times in 2007, while keeping ticket surcharges at a level twice as high as a year earlier.
"We forecast robust demand, especially given the rising incomes in China," said Jack Xu, an analyst at Sinopac Securities Asia Ltd. "Going forward, China Southern will see even lower jet fuel expenses. We expect them to return to profit in the second quarter," he added.
China Southern is expanding its fleet about a fifth this year to grab market share, particularly in its home base of Guangdong, China's manufacturing hub and richest province. It is also set to start at least 10 new overseas routes before the 2008 Beijing Olympics Games, challenging Air China Ltd., the nation's largest international carrier.
The airline will begin flying between Shanghai and Cebu in the Philippines in June, the Manila-based Star newspaper said today, citing the Philippine consul-general in China.
Passenger Numbers
China Southern flew 12.6 million passengers in the three months ended March, filling 71.4 percent of its seats. Cargo volume rose 4.9 percent to 190,000 tons.
The airline also reported its 2006 earnings to the Shanghai stock exchange eight days ago. Chinese companies often report full-year and first quarter earnings close together as the deadline for both is April 30.
The airline posted its first annual profit in four years in 2006, helped by a stronger yuan and increased traffic. Net income was 188 million yuan, compared with a year-earlier loss of 1.85 billion yuan. The carrier operated a fleet of 309 aircraft at the end of last year.
Overall passenger numbers in China rose 16 percent to 40.9 million in the first quarter, according to the General Administration of Civil Aviation. The country's economy grew 11.1 percent in the period, boosting travel demand.
Shares of China Southern fell 3.3 percent to HK$3.50 in Hong Kong yesterday. The stock has gained 11 percent this year, compared with an 19 percent gain in the 16-member Bloomberg Asia Pacific Airlines Index. The airline's Shanghai-listed stock was suspended on March 23 ahead of a share reform plan.
Fuel Surcharges
China cut the levy on domestic flights of more than 800 kilometers (497 miles) to 80 yuan ($10) each way from Jan. 21. The levy on shorter flights fell to 50 yuan. That compares with 40 yuan and 20 yuan respectively a year earlier. Levies were as much as doubled from Sept. 21 last year before the Jan. 21 cut.
The price of jet fuel averaged $72.11 a barrel in the first quarter in Singapore, 4.7 percent lower than a year earlier, according to data compiled by Bloomberg.
China Southern flew 12.6 million passengers in the three months ended March, filling 71.4 percent of its seats. Cargo volume rose 4.9 percent to 190,000 tons.
The airline also reported its 2006 earnings to the Shanghai stock exchange eight days ago. Chinese companies often report full-year and first quarter earnings close together as the deadline for both is April 30.
The airline posted its first annual profit in four years in 2006, helped by a stronger yuan and increased traffic. Net income was 188 million yuan, compared with a year-earlier loss of 1.85 billion yuan. The carrier operated a fleet of 309 aircraft at the end of last year.
Overall passenger numbers in China rose 16 percent to 40.9 million in the first quarter, according to the General Administration of Civil Aviation. The country's economy grew 11.1 percent in the period, boosting travel demand.
Shares of China Southern fell 3.3 percent to HK$3.50 in Hong Kong yesterday. The stock has gained 11 percent this year, compared with an 19 percent gain in the 16-member Bloomberg Asia Pacific Airlines Index. The airline's Shanghai-listed stock was suspended on March 23 ahead of a share reform plan.
Fuel Surcharges
China cut the levy on domestic flights of more than 800 kilometers (497 miles) to 80 yuan ($10) each way from Jan. 21. The levy on shorter flights fell to 50 yuan. That compares with 40 yuan and 20 yuan respectively a year earlier. Levies were as much as doubled from Sept. 21 last year before the Jan. 21 cut.
The price of jet fuel averaged $72.11 a barrel in the first quarter in Singapore, 4.7 percent lower than a year earlier, according to data compiled by Bloomberg.
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