Costlier jet fuel clips China South­ern profit

The Sun (Malaysia) - - SUNBIZ -

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

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