NewChina Southern’s 2015 net profit soars 117 per cent
Profit more than doubles at China’s largest airline on traffic growth and fuel cost reduction
China Southern Airlines, Asia’s largest carrier by fleet size, on Wednesday reported 2015 profit jumped 117 per cent to 3.85 billion yuan (HK$4.61 billion), helped by the plunge in oil prices.
Fuel costs during the period dropped 30.36 per cent to 26.27 billion yuan, while revenue only grew 2.91 per cent to 111.4 billion yuan. However, a 5.95 billion yuan exchange loss resulting from the weakening yuan helped to counterbalance the profit growth.
The results, on the low end of the company’s forecast range, lagged analysts’ estimates. The airline would have made more money had there not been a 6.2 per cent devaluation of the yuan in the second half of last year, which meant it had to pay more interest on its US-dollar denominated debt. The airline has outstanding debt amounting to 136.7 billion yuan, the bulk of which is denominated in US dollars.
Bocom International analyst Geoffrey Cheng said fuel savings and traffic growth were the key earnings drivers for Chinese airlines last year, while the yuan depreciation was notable in the fourth quarter.
“China Southern is the most exposed to currency risks among its peers and suffered net profit attribution from the yuan depreciation,” he said.
The firm incurred a loss of 805 million yuan in the fourth quarter after a best-ever performance in the first half.