Beijing: China Southern Airlines Ltd., one of China’s biggest state-owned carriers, said Wednesday it swung to a 4.8 billion yuan ($700 million) loss in 2008 due to record fuel costs and slower traffic amid global economic turmoil.
The loss, equal to 0.74 yuan per share, compared with a 2007 profit of 1.8 billion yuan or 0.28 yuan per share, the airline said in a statement.
China’s airlines have been battered by last year’s surge in fuel costs and a travel slump. China Southern rivals Air China Ltd. and China Eastern Airlines Ltd. say their profits also will be hurt by large wrong-way bets on fuel prices, though China Southern avoided that pitfall.
China Southern, which is based in the southern business center of Guangzhou, blamed its loss on “a slowdown of growth in traffic revenue and rising operating expenses as a result of (the) global financial crisis and increase of jet fuel cost.”
Revenue in mainland China expanded slightly, rising by 3.3% on a 3.4% increase in passenger numbers, the carrier said. But international revenue dropped 6.2% on a 6.7% fall in passengers.
At the same time, operating costs rose 16.6% due to higher fuel prices, maintenance and other expenses, the airline said.
China Southern received a 3 billion yuan ($440 million) capital injection from the government in November to help it ride out the crisis. Air China and China Eastern received similar aid.
The carriers have also been exempted from a tax on fuel surcharges from Jan. 1, 2007, through 2010, a move the government says will save them a total of 2.5 billion yuan ($360 million).
China Southern warned that conditions for the year ahead were uncertain.
“The airlines industry will continue facing tough challenges such as decrease in international market demand and overcapacity in the domestic markets,” the carrier said. But it said it was “confident in the overall improvement of the business performance in year 2009.”