China Southern expands despite crisis

While many airlines have cut back on frequencies and routes they serve, including parking their aircraft to reduce costs, China Southern Airlines has done the reverse. Instead, the airline has added several new flights to its winter-spring schedule as it confronts the global downturn which saw it post its first loss in three years.


China Southern Airlines, the nation’s largest carrier, said it’s “confident” of improving business performance in 2009 after posting its first loss in three years, citing government support along with domestic travel fuelled by China’s economic growth, the carrier said in a Hong Kong stock exchange statementrecently.

The carrier posted a 2008 net loss of 4.8 billion yuan (US$703 million) after natural disasters disrupted flights and the slowing global economy depressed passenger and cargo volumes.

Cargo volumes fell 18.5 per cent to 159,120 tonnes in the first quarter 2009 compared to a year earlier. Last year, the Guangzhou-based airline’s passenger numbers rose 2.3 percent to 58.2 million, or 31 per cent of the nation’s total.

The carrier avoided a move substantial loss because of less fuel hedging exposure, compared to other Chinese carriers. Aside from closing all of its hedging positions in September, the airline also hedged less fuel than its rivals because of its greater reliance on domestic routes. Chinese airlines are unable to hedge purchases for internal services because of government pricecontrols.

China Southern will also save US$1 billion this year by delaying deliveries of Airbus A380s and Boeing B787s. China Southern, the nation’s only A380 customer.

The 13 787s and five A380s will now arrive from 2011, Board Secretary Xie Bing said recently. The carrier is also in talks to postpone four Boeing 777 freighters due this year, said chief financialofficer Xu Jiebo.