Earnings slump sinks China Southern profit 24%
March 30, 2014, 12:03 am TWN
HONG KONG -- China Southern Airlines, the country's biggest airline by fleet size, said net profit for 2013 fell more than 20 percent, the latest Chinese carrier to be hit by a weak economy and stiff competition.
Net profit was 1.99 billion yuan (US$320 million), down 24.2 percent from the previous year's 2.62 billion yuan, with revenue also 1 percent lower at 98.55 billion yuan, it said in a statement filed late Friday to the Hong Kong stock exchange.
The Guangzhou-based airline is one of the three state-owned airlines hit by double-digit net profit drops for 2013, with Air China seeing a 32-percent fall, at 3.32 billion yuan, compared to 2012.
Shanghai-based China Eastern Airlines also saw 2013 net profit slid by 25 percent to 2.38 billion yuan compared to the previous year.
"In 2013, the overall global economy was still on the basic trend of slow recovery, the risk of a deterioration of the economy was not completely removed," China Southern said in the statement.
Despite a higher demand for air travel in China, other travel alternatives including express railways and high oil prices contributed to lower profits for the airline, it said.
China's aviation market will enter "an era of full competition," the airline said of 2014, citing moves to open up the industry.
"Low-priced flights will become more popular, and airlines with low cost structure will have rapid development," it said, adding that there would be less room for growth for the "traditional business market."
Both China Eastern Airlines and Air China cited similar challenges when they reported their 2013 net profit, saying intensified competition and sluggish recovery in the world economy were to blame for the drop in earnings.
"The aviation industry will continue to face serious challenges such as intensifying competition, dwindling resources, and rising operating costs," Air China said of 2014 in a Tuesday statement.
China Southern launched its new Boeing 787 jets on daily flights between Guangzhou and Vancouver last month
The airline reported a 19-percent decrease in net profits for the first half of 2013 due to a slowdown in domestic demand.