Costlier jet fuel clips China Southern profit
SHANGHAI: Asia’s biggest carrier China Southern Airlines said higher jet fuel costs clipped its profit in the first half, while China Eastern earnings rose but only with the help of a one-off asset sale.
Net profit at state-owned China Southern dropped 11.1% year-on-year to 2.77 billion yuan (RM1.8 billion) in January-June, the carrier said late Tuesday in a statement to the Hong Kong stock exchange, where it is listed.
Its bottom line was hit by a more than 30% rise in operating expenses due to higher jet fuel costs, which offset revenue gains, the Guangzhou-based airline said.
Chinese carriers have benefited from a boom in domestic and international air trips as China’s middle class spends more on travel and leisure.
China Southern said its total operating revenue increased 11.7% in the first half, to 57.82 billion yuan.
China Southern’s shares jumped 4.74% in Hong Kong yesterday and were 5.81% higher in Shanghai, where the company also is listed.
China Eastern said in an exchange statement that its net profit for the first half jumped 34.4% to 4.34 billion yuan, but that was due to 1.9 billion yuan earned through the sale of a logistics subsidiary.
The Shanghai-based carrier’s jet fuel expenses surged 45%.
“The international crude oil prices have increased significantly from a lower comparison base in the same period last year,” China Eastern said, adding that intensifying industry competition resulted in a drop in revenue from its international routes.
However, strong demand boosted operating revenue nearly 10%.
China Eastern said in July it will buy a 10% stake in Air France-KLM for about 375 million (RM1.91 billion) as it moves to expand its network in Europe. – AFP