China Southern Airlines said it turned a profit last year after recording a loss of 1.794 billion yuan (US$239 million) in 2005, as gains from a stronger yuan offset high jet fuel costs.

 

China's biggest carrier by fleet size earned 118 million yuan, or 0.03 yuan per share, in 2006, the Guangzhou-based airline told the Shanghai Stock Exchange yesterday.

 

China Southern raked up revenue of 47.05 billion yuan last year, a 20.5 percent increase over the 39.05 billion yuan reported in 2005, the carrier said.

 

It did not propose a dividend.

 

"Like some of its domestic rivals, China Southern returned to profit from a big loss last year as a stronger yuan cut its borrowing costs," said Ji Lijun, an analyst at Shanghai Securities Co.

 

"The carrier also benefited from jet fuel surcharges that offset the higher fuel costs," she said.

 

China Southern's gains from a firmer yuan increased 22 percent last year to 1.49 billion yuan as the yuan appreciation cut costs on US dollar-denominated debts, the carrier said. The yuan rose against the US dollar by three percent last year.

 

The carrier, which is set to join the SkyTeam Alliance, said it reinforced its strategic realignment last year from a point-to-point operational model to a hub-network model to better meet the challenge of an increasingly competitive market.

 

It also expanded coverage on international and domestic routes to meet customer demand, it said.

 

The airline said its full-year passenger numbers rose 12 percent to 49.2 million, while its cargo volume increased 6.5 percent to 851,580 tons.

 

The airline is expanding capacity to compete for market share. It is set to start at least 10 new international routes before the Beijing Olympic Games next year, it said.

 

It plans to add 68 planes this year, expanding its fleet by about one-fifth. China Southern operated 309 planes at the end of 2006.

 

The carrier also said its passenger load factor was 71.7 percent last year, compared with 75.9 percent for Air China Ltd.

 

Passengers accounted for 91 percent of the airline's sales last year, while cargo contributed eight percent.

 

(Shanghai Daily April 19, 2007)