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China Southern profits soar; MAS swings to net loss; Thai Airways profit beats forecasts

17-Aug-2010

China Southern reported a large improvement in the six months ended 30-Jun-2010, with net profits of USD303.2 million compared with USD3.7 million in 1H2009. Operating profits increased 29.3% in the period, to USD259.4 million, with the carrier benefitting from surging travel demand and the sale of a stake in a maintenance venture.

The positive profitability results occurred as operating revenues increased 39.8% to USD4,969 million, passenger numbers increased 17.1% to 36.2 million, passenger load factors gained 4.1 ppts to 77.9%, while break-even load factor decreased 2.4 ppts to 65.9% and yield gained 11.5% to USD 8.49 cents. Meanwhile, total costs increased by 29.3% to USD4,737 million in the period.

Upon the release of the results, the carrier stated:  “Looking into the second half of 2010, benefitting from steady growth in the domestic economy and optimal adjustment to economic structures, the aviation market will remain a sound momentum for rapid growth, while the improvement in national income, supported by a stimulus plan promulgated by the state, shall continue to lay a solid foundation for the aviation industry."

The carrier, however cautioned: “We are also aware of the fact that the global economic recovery falters, and the domestic economy, affected by structure adjustment and implementation of macroeconomic control policies, may slow down. The company also faces a new challenge from the operation of high-speed railways."

Shares in the carrier gained 0.8% to HKD3.85 in Hong Kong yesterday. The shares have climbed 59% in 2010, outpacing a 45% gain for Air China and a 56% increase for China Eastern. Air China and China Eastern are due to report earnings later in the month. 

Chinese airlines report profit of USD808m; industry profits of USD949m

In other China news, CAAC reported that the nation’s airlines reported a combined profit of USD808 million in Jul-2010, contributing 85% of the industry profit of USD948.8 million, which represented growth of 363.5% year-on-year increase. Airports contributed USD76.1 million to the result, with "other" industry companies contributing USD64.4 million.

Meanwhile, passenger numbers increased 21.0% in the month to 25.5 million, at an average load factor of 83.6% (+6.8 ppts), while cargo volumes were also up, increasing 23.6% year-on-year to 4.8 tonne kilometres, while aircraft utilisation increased by 0.2 hours to 9.8 hours.  Both the passenger and cargo figures represented new records.

Meanwhile, a report released by China Merchants Securities predicted that Air China, China Southern Airlines and China Eastern Airlines would report net profits of USD585.7 million, USD292.8 million and USD410.0 million, respectively, in 3Q2010.

Malaysia swings to net loss in 2Q2010; improved loss at operating level

Also reporting financial results yesterday was Malaysia Airlines, with the carrier reporting a 6.5% share price increase yesterday.

Malyasia Airlines swung to a net of USD167.8 million loss in the second quarter (compared with a profit of USD275.4 million in 2Q2009) as earnings were negatively effected by higher fuel spending (+44.2% to USD347 million) and fuel hedging losses, prompting CEO, Azmil Zahruddin, to comment: "The volatility of the fuel price remains a key challenge for the industry."

The carrier reported a USD89.8 million operating loss in the period, although this represented an improvement on a loss of USD133.8 milion in the previous corresponding period, with the carrier expecting a profitable result in the full year. Also in the three-month period, operating revenues increased 26% to USD1,006 million, with a 17.7% increase in operating costs (to USD1,100 million).

Meanwhile, yield increased 2% to USD 7.52 cents in the period (with freight yield increasing 21% to USD 26.57 cents), with RASK increased 15% to USD 5.57 cents. On a cost-side, CASK increased 6,0% to USD 5.60 cents. Passenger numbers, meanwhile, increased by 14.3% to 3.2 million, with a strong load factor gain of 8.2 ppts (to 74%).

Announcing the results, the carrier stated: "Given that passenger load factor has recovered to the pre-crisis level, the focus for second half of 2010 shifts to strengthening yield and intensifying fuel cost mitigating initiatives."   

Thai Airways' second quarter net profit beats forecast

Meanwhile, Thai Airways reported a better-than-expected second-quarter net profit of USD48.8 million in the three months ended Jun-2010, a notable turnaround from a USD169.8 million net loss in 2Q2009, as foreign exchange gains helped to offset lower passenger numbers and load factors (-1.6 ppts to 64.6%) related to anti-Government protest in Bangkok over the Mar-2010 to May-2010 period. 

Also in the period, revenues increased 14.5% to USD1,245 million, outpacing a 10.0% increase  in costs (to USD1,317 million). The EBITDAR stood at USD100.1 million in the quarter. Shares in the carrier gained 6.0% yesterday.

China Airlines’ yield up strongly in Jul-2010

Shares in China Airlines also gained strongly, up 6.4%, as the carrier reported considerable yield growth in Jul-2010, with passenger yield increased 40% to USD 7.99 cents and cargo yield soaring 53.8% to USD 27.50 cents. Passenger traffic (RPKs) increased 11.7% in the month, with a 30.9% gain in cargo traffic (FTKs), with passenger load factors increased 6.5 ppts to 84.6%.

Asia Pacific selected airlines daily share price movements (% change): 16-Aug-2010


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