China Southern Airlines

China Southern's income dips 29pc

PUBLISHED : Monday, 29 October, 2012, 12:00am
UPDATED : Monday, 29 October, 2012, 5:08am

China Southern Airlines, the nation's biggest carrier by passenger numbers, reported a 29 per cent drop in third-quarter profit on rising operating costs and currency fluctuations.

Net income declined to 2.22 billion yuan (HK$2.73 billion) from 3.13 billion yuan a year earlier, the company said in a filing to the Shanghai stock exchange, citing domestic accounting standards. Sales rose 9 per cent to 29.8 billion yuan.

Operating costs, which include fuel expenses, rose 10 per cent to 22.7 billion yuan, the carrier said in the filing. Financial expenses were 518 million yuan, compared with a net gain of 764 million yuan a year earlier when the yuan posted a greater increase against the US dollar.

The yuan appreciated 1.1 per cent against the greenback in the third quarter, compared with a 0.93 per cent drop in the first half and a 1.29 per cent gain a year earlier, according to China Foreign Exchange System. Chinese airlines, which have substantial borrowings in US dollars, benefit from a stronger yuan as it pares the repatriated value of dollar-denominated debts taken to buy planes and fuel overseas.

China Southern carried 23.8 million passengers in the third quarter, 8 per cent more than a year earlier. It this month started flying the Airbus A380 on the Guangzhou-Los Angeles route, ending a year-long wait to use the superjumbo for international services. The stock fell 2.9 per cent to close at HK$3.67 on Friday in Hong Kong trading, before the results were released.