China Southern’s 2013 operating profit sinks 70%

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China Southern Airlines’ operating profit for 2013 fell by 70% to CNY1.51 billion ($243.6 million) as expenses grew and revenue declined.

The carrier’s operating revenue for the year fell by almost 1% to CNY98.5 billion. Operating expenses went up by 2.5% to CNY98.2 billion on higher aircraft servicing, marketing, depreciation and amortisation expenses.

The SkyTeam member's net profit was down 24% to CNY1.98 billion.

During the year, China Southern carried 91.8 million passengers, a 6.1% increase year-on-year. RPKs rose 9.5%, while ASKs increased by 10.1% resulting in a 0.6 percentage point decrease in load factor to 79.45%. Yield per RPK also declined 10.6% to CNY0.59.

On the cargo front, revenue tonne kilometres (RTKs) increased by 8.1%, as capacity increased by 8.2%. That pushed its cargo load factor down marginally to 70%, while yield per RTK was down 8.9% to CNY5.42.

Over the year, China Southern added 70 aircraft to its fleet, leaving it with a total fleet of 561 aircraft. The additional aircraft pushed its utilisation rate down from 9.81 to 9.63 block hours per day.

In its outlook, the carrier says that it expects that there will be no change to the “fundamentals of the long-term positive trend” of the Chinese economy, with urbanisation and a stronger global economy expected to stimulate demand.

It warns, however, that economic uncertainty, a possible rise of the Chinese yuan against the US dollar, and growing competition from other airlines and high speed rail may affect its 2014 results.