China Southern's 2007 profits up tenfold

An appreciating yuan, and strong domestic demand, have increased full-year earnings of China Southern Airlines nearly tenfold in 2007. The carrier has reported a CNY1.871 billion ($267.1 million) profit for the fiscal as compared to CNY188 million for the previous year.

The carrier said that operating revenue had climbed 18.2% to CNY55.87 billion. It said the "fast-growing Chinese economy" was the chief driver for this growth, along with its "strategic transformation from a point-to-point operation to a hub-and-spoke operation."

Operating expenses grew 16.1% to CNY47.38 billion, with fuel accounting for 38.9% of costs, up 13.1 per cent. Passenger numbers increased 15.6% to 56.9 million and average load factor improved 2.8 per cent to 74.5%.

Cargo traffic increased 6.5% to 872,000 tonnes.

China Southern said it had continued the momentum in Q1 of  2008 with a CNY796 million profit.

As for its outlook, China Southern said it expects to benefit from "continuous robust domestic demand" and also that it remained committed to its double-hub strategy centered on Beijing and Guangzhou.

It also said that it had approved the purchase of 20 737s by Xiamen Airlines, in which it is the majority shareholder with a 60% stake. The new aircraft will cost less than the catalogue price of $1.5 billion and will be delivered between April 2014 to October 2015.