Companies

China Southern Airlines profit rises

(Agencies)
Updated: 2010-08-17 10:06

China Southern Airlines Co, Asia's biggest carrier by passenger numbers, said it boosted first-half profit more than 54-fold because of surging travel demand and the sale of a stake in a maintenance venture.

Net income rose to 2.1 billion yuan ($309 million), from 38 million yuan a year earlier, the company said in a Shanghai stock exchange statement today. That beat the 1.98 billion yuan average of three analyst estimates compiled by Bloomberg. The airline made an operating profit of 1.2 billion yuan, compared with a loss of 574 million yuan a year earlier.

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China Southern, Air China Ltd and China Eastern Airlines Corp, the country's three big carriers, boosted first-half passengers by at least 17 percent as economic growth stoked demand for leisure and business travel. Guangzhou-based China Southern also sold its 1.6 billion yuan stake in MTU Maintenance Zhuhai Co to its parent to focus on flying and to pare debts.

"A rebound in the economy has spurred travel demand for all airlines," said Leo Fan, an analyst at Shenyin & Wanguo Securities Co. "We expect profit growth to continue and earnings may surpass 2007 levels."

First-half sales rose 39 percent to 34.7 billion yuan, the company said. The airline flew 36.2 million travelers in the period. It filled 77.9 percent of available seats, an increase of 3.1 percentage points.

The carrier rose 0.8 percent to HK$3.85 in Hong Kong before the announcement. The shares have climbed 59 percent this year, compared with a 45 percent gain for Air China and an increase of 56 percent for China Eastern. In Shanghai, China Southern rose 0.8 percent to 7.66 yuan, bringing its gain this year to 26 percent.

Air China and China Eastern are due to report earnings later in the month. The global airline industry may post combined net income for the first time in three years as travel demand recovers after the worst recession in more than six decades, according to the International Air Transport Association.

China Southern said on July 28 that it expected to report an increase of more than 5,000 percent in first-half profit.