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China Southern sees improved traffic in 2010; to benefit from potential yuan appreciation

14-Apr-2010 10:02 AM

China Southern Airlines, which reported a CNY330 million profit in 2009, stated the following about its prospects and priorities for 2010 (Reuters/AFP/Bloomberg/The Standard, 14-Apr-2010):

  • Traffic: The carrier expects to report double-digit growth in passenger and cargo volumes in 2010;
  • Chinese Yuan: The carrier stated it would benefit from a rising Chinese Yuan, as it has significant US dollar dominated debt, which account for 89.5% of total debt. CEO, Xu Jiebo, added that if the yuan appreciated by 1%, it could record CNY500 million of exchange gains;
  • Market share: Chairman, Si Xianmin, stated that the Guangzhou-based airline plans to boost its market share in Shenzhen from 30% currently to 40% within three years and Hainan market share from 32% to 40% by 2015. He added the carrier does not feel threatened by Air China's plan to take control of Shenzhen Airlines;
  • Freight: The carrier stated it is seeking to cooperate with international and domestic airlines to develop its air cargo business, with Mr Si commenting, "China Southern does not rule out the possibility to cooperate with some domestic airlines on developing cargo business". The carrier, which had planned to launch a cargo JV with Air France-KLM prior to the global economic crisis, commented that "Air France is not our only choice";
  • Capital spending plans: Plans to invest CNY16.4 billion in capex in 2010, unchanged from 2009's level, mainly for aircraft purchases. The airline expects to add 34 aircraft, taking the total to 412, by the end of 2010;
  • Global alliances: Mr Si stated he sees further room for cooperation with China Eastern Airlines if the Shanghai-based carrier joins SkyTeam
  • Air fares: Mr Xu stated that "there is room for raising ticket prices" in the market.

China Southern Airlines: "The market this year is definitely better than last year. Our domestic market volume has already surpassed the pre-financial crisis level," Xu Jiebo, CEO. Source: Reuters, 14-Apr-2010.