Coastal Ports News
- Southern Air to post profit for 2006
Date: 30-Jan-2007 Sources: (Shenzhen Daily)
CHINA Southern Airlines forecast it will post its first annual profit in four years, helped by a stronger yuan, higher fuel surcharges and increased traffic.
The airline will post a 2006 profit on foreign exchange gains and improved operations, China Southern said in a statement to the Shanghai Stock Exchange yesterday, without providing further details. The firm will report full-year earnings in April.
China's approval of two levies last year helped compensate for fuel costs that had risen 77 percent in 2005, while a 3.4 percent gain in the yuan reduced the value of the airline's dollar-denominated debt. China Southern's three years of losses were worsened by rules forcing the nation's airlines to buy jet fuel from a State distributor.
'The carrier is still suffering from the government-controlled fuel price and low-cost competition in domestic routes,'' said Alan Lam, an analyst with Guotai Junan Securities (Hong Kong) Ltd. 'Whether it makes a profit or loss depends on how much the yuan rises.''
Most regional carriers such as Cathay Pacific Airways Ltd. and Singapore Airlines Ltd. are free to choose their jet fuel suppliers and raise surcharges when needed.
The carrier's sales reached 46.5 billion yuan (US$5.98 billion) last year, Xinhua reported Jan. 16, citing pre-audit figures. The airline posted a 2005 net loss of 1.85 billion yuan on sales of 38.3 billion yuan.
Passenger traffic rose 11.5 percent to 49.2 million, while cargo volume increased 5.6 percent to 818,000 tons last year, China Southern said Jan. 10.
The airline may have gained 1.1 billion yuan from the rise in the yuan, while the higher fuel surcharges likely led to an increase of 2.63 billion yuan in revenue, Lam said.
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