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China Southern Airlines' Net Profit to Surpass Expectations

| Jan 30, 2016 09:50 AM EST

Two China Airlines planes taxi on the runway at Taoyuan International Airport on Sept. 28, 2010.

China Southern Airlines, the world's sixth largest airline, has announced on Wednesday its estimated net profit of 2015, expecting an increase of 110 percent to 130 percent as compared to the previous year. However, the results have not yet been audited.

In 2014, the airline's net profit amounted to 1.773 billion yuan, with earnings accounting to 0.18 yuan per share.

According to a company press release, it holds the demand growth of the Chinese civil aviation transportation market as one of the reasons for its net profit increase.

In addition, the company focused on optimizing resource allocation and grabbed the best possible market opportunities, for which the operating revenue of the company increased marginally compared to 2014.

The company attributed the estimated rise of the revenue to the growth of its domestic and international networks. It also introduced improved cost control methods prompting a cost cut. The company has further benefitted from the fluctuation of the international crude oil price at a lower level which pulled down their cost of jet fuel price.

China Southern Airlines also undertook a substantial initiative to deal with the sharp depreciation of the yuan. Other airlines in China are also dealing with the falling currency.

However, analysts believe that Chinese domestic airlines might enjoy strong growth in business due to the availability of cheaper fuel and rising demand.

"Because of those lower fuel costs, the entire aviation industry expects strong profits in 2015," said Han Yichao, an aviation expert at Changjiang Securities, as quoted by China Daily.

Meanwhile, Air China Company Ltd., the country's flag carrier, has also announced on Monday an expected rise of at least 6.051 billion yuan in net profit as a result of optimizing its debt structure and adding direct sales, indicating an increase of 60 percent to 80 percent as compared to 2014.

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