China Southern records profit on yuan in 2017, focus on higher fares
During the period, the total traffic revenue was RMB121,873 million, an increase of RMB 12,180 million or 11.10% from prior year, mainly due to the increase in transport capacity and traffic volume.
China Southern Airlines (the “Company”) announced the annual results for the year ended December 31, 2017.
Net income rose 18 percent to 5.96 billion yuan (USD 950 million) last year while revenue rose 11 percent to 127 billion yuan.
Operating profit of RMB 9,156 million was recorded in 2017 (2016: RMB12,612 million). The decrease in operating profit was mainly due to the net effect of increase in operating revenue by RMB 12,825 million or 11.15%, as a result of the increase in transport capacity and traffic volume; and the increase in operating expenses by RMB 16,894 million or 15.91%, due to the increase in jet fuel costs and staff costs.
The profit attributable to equity shareholders of the Company of RMB 5,961 million was recorded in 2017 as compared to the profit attributable to equity shareholders of the Company of RMB 5,044 million in 2016. Of which, Xiamen Airlines achieved a net profit of RMB1,477 million and maintained profitable for 31 consecutive years.
A strengthening yuan provided tailwind as an appreciating local currency makes it less expensive to repay dollar-denominated debt raised to pay for aircraft. The yuan rose 6.7 percent against the greenback in 2017.
After adding too many direct flights to destinations including Paris, Sydney and New York, the country’s top three government-controlled carriers are now directing their efforts on higher ticket prices for inland flights amid a boom in travel. The air-safety regulator’s caps on flight slots to help improve on-time performance also led to higher fares and slower decline in passenger yields -- a key metric of profitability.
China Southern doubled domestic passenger flight capacity addition to 8 percent in 2017, while almost halving the pace of international expansion to 14 percent in the same period.
Read Original Article