China Southern sees loss in H1 |
http://www.sina.com.cn 2005/07/18 14:18 Shanghai Daily |
China Southern Airlines Co Ltd, the country's largest carrier by fleet size, yesterday forecast it would fly into a loss for the first half of the year due to soaring fuel prices. "According to the Chinese accounting standard, the company is likely to lose money during the first half of this year," Shanghai-listed China Southern said in a statement to the stock exchange. The carrier earned a net profit of more than 333 million yuan in the first six months of 2004. The Guangzhou-based airline didn't reveal how much it might lose, but will post the half-year results on August 29. China Southern, however, flew more passengers and cargo during the period. It carried more than 20.25 million people, a jump of 52.1 percent from a year earlier, and handled 30.4 percent more cargo and mail to about 347,760 tons from January to June. The carrier posted a loss in the first quarter of this year of 285 million yuan, as its fuel oil expenses jumped 91 percent on-year. China raised the retail prices of aviation fuel twice this year, which has surged to 4,920 yuan per ton. China Southern is not the only victim plagued by the fuel costs. Shanghai Airlines Co and Shandong Airlines Co predicted in earlier statements that their first-half profits may fall more than 50 percent from a year ago. China Eastern Airlines Co, the nation's third-largest carrier, also posted a decline in its net profit in the first three months to 50.43 million yuan from 184.03 million yuan a year earlier, also on higher oil prices. Fuel costs have become the biggest part of their total costs accounting for 27 to 33 percent, Li Fenghua, president of China Eastern Air Holding Co, parent of the carrier, previously said. Industry watchers believed that the high oil prices, and stiffer competition, will hurt the carriers' profit margin seriously this year. Chinese airlines find it difficult, if not impossible, to stave off the rise in oil prices as the domestic aviation oil supply sector is dominated by China Aviation Oil Holding Co. The jump in fuel prices struck China Southern more seriously as its network is mainly domestic based, unlike its rivals such as Air China and China Eastern, said Li Lei, an analyst with China Securities Co Ltd. "Carriers which fly more international routes can refuel their jets at overseas airports," he said, adding that this will save them fuel charges of around 20 percent, compared with refueling at domestic airports. Meanwhile, the keen competition has also made some smaller airlines offer cheap tickets to lure passengers. But the big three carriers have been told by the General Administration of Civil Aviation of China that they will not be able to resume fuel surcharges on domestic services. Instead they could raise fares to cover the growing fuel costs. |
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