China Southern Airlines (CSA) is the mainland's No 1 carrier, with key routes from Hong Kong to Beijing and Hong Kong to Xiamen. The airline's main rivals are Air China and Dragonair. In a recent report, KGI Asia said despite last week's 38.8 per cent drop in interim results to 123 million yuan (about HK$116 million), the airline's operating performance was satisfactory for the first half of this year. The plunge in profits mainly resulted from the rising yen against the US dollar. 'Looking ahead, although the rise of the Japanese yen has recently stabilised, the rebound of oil prices since March 2002 would definitely increase CSA's fuel expenses in the second half of the year,' the KGI Asia report said. 'Therefore, CSA might still see lots of challenges in its [second half] results.' For this reason, KGI Asia recommended a 'neutral' stance for the airline. Graphic: then01gwz
