China South­ern profit down as earn­ings slump

The Pak Banker - - COMPANIES/BOSS -

China South­ern Air­lines, the coun­try's big­gest air­line by fleet size, said net profit for 2013 fell more than 20 per cent, the lat­est Chi­nese car­rier to be hit by a weak econ­omy and stiff com­pe­ti­tion.

Net profit was 1.99 bil­lion yuan (Dh1.18 bil­lion, $320 mil­lion), down 24.2 per cent from the pre­vi­ous year's 2.62 bil­lion yuan, with rev­enue also one per cent lower at 98.55 bil­lion yuan, it said in a state­ment filed late Fri­day to the Hong Kong stock ex­change.

The Guangzhou-based air­line

is one of the three state-owned air­lines hit by dou­ble-digit net profit drops for 2013, with Air China see­ing a 32 per cent fall, at 3.32 bil­lion yuan, com­pared to 2012.

Shang­hai-based China East­ern Air­lines also saw 2013 net profit slid by 25 per cent to 2.38 bil­lion yuan com­pared to the pre­vi­ous year.

"In 2013, the over­all global econ­omy was still on the ba­sic trend of slow re­cov­ery, the risk of a de­te­ri­o­ra­tion of the econ­omy was not com­pletely re­moved," China South­ern said in the state­ment.

De­spite a higher de­mand for

air travel in China, other travel al­ter­na­tives in­clud­ing ex­press rail­ways and high oil prices con­trib­uted to lower prof­its for the air­line, it said.

China's avi­a­tion mar­ket will en­ter "an era of full com­pe­ti­tion", the air­line said of 2014, cit­ing moves to open up the in­dus­try. "Low-priced flights will be­come more pop­u­lar, and air­lines with low cost struc­ture will have rapid de­vel­op­ment," it said, adding that there would be less room for growth for the "tra­di­tional busi­ness mar­ket".

Both China East­ern Air­lines and Air China cited sim­i­lar chal­lenges when they re­ported their 2013 net profit, say- ing in­ten­si­fied com­pe­ti­tion and slug­gish re­cov­ery in the world econ­omy were to blame for the drop in earn­ings.

"The avi­a­tion in­dus­try will con­tinue to face se­ri­ous chal­lenges such as in­ten­si­fy­ing com­pe­ti­tion, dwin­dling re­sources, and ris­ing op­er­at­ing costs," Air China said of 2014 in a Tues­day state­ment.

China South­ern launched its new Boe­ing 787 jets on daily flights be­tween Guangzhou and Van­cou­ver last month The air­line re­ported a 19 per cent de­crease in net prof­its for the first half of 2013 due to a slow­down in do­mes­tic de­mand.

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