China airlines post mixed results, warn of headwinds

China Southern Airlines may see profits damper due to high cost of fuel prices. (Reuters pic)

BEIJING: Chinese carriers posted mixed results for 2018 but have warned of stronger headwinds in the coming year, which could continue to put a damper on profits.

China Southern Airlines, the country’s largest carrier by passenger numbers, reported a 3.71% decrease in net profit, posting 8.82 billion yuan (US$1.31 billion).

This was mainly due to increased operating expenses from higher passenger volume and rising jet fuel prices, the company said in an earnings report filed to the Hong Kong Stock Exchange late Friday.

It also warned that big fluctuations in the yuan this year, along with an ongoing increase in oil prices, are likely to weigh down profits.

Net profit for the country’s second-largest airline by passengers, China Eastern Airlines, slumped 56.98% to 2.93 billion yuan in 2018, it reported Friday evening.

The airline put this down to an increase in operational costs, chiefly due to the 25% jump in jet fuel costs, resulting in additional spending of 6.72 billion yuan.

“China’s civil aviation industry is expected to continue to maintain a relatively fast pace for development, but (the) domestic and international macro-economic situation and changes in trade relations, oil prices and exchange rate fluctuations will bring uncertainties to the development of the industry,” it said.

But rival Air China reported a net profit of 7.35 billion yuan, a 1.47% increase, in a filing on Wednesday, crediting its push to upscale operations despite the impact of ‘unfavourable factors’ like higher oil prices.

The Civil Aviation Administration of China reported in January that the country’s aviation sector saw a 10.9% jump in passenger traffic in 2018 to 610 million and a 4.6% increase in cargo and mail transportation, with the trend set to continue in 2019.