China Southern Airlines Announces 2002 Interim Results

China Southern Airlines Company Limited together with its subsidiaries (collectively, the "Group") announced the unaudited consolidated results of the Group for the six months ended June 30, 2002.

During the Period, the Group's turnover increased by 6.0% to RMB 8,558 Million as compared to the same period last year. Operating profit was RMB 826 Million, representing an increase of 36.5% as compared to the same period last year. Profit attributable to shareholders dropped by 38.8% to RMB 123 Million as compared to the same period last year. 

The decrease was mainly due to an exchange loss on retranslating its Japanese yen debts as a result of the appreciation of Japanese yen during the Period. Basic earnings per share was RMB 0.04. The board of directors of the Company did not recommend any interim dividend for year 2002. 

The Company's Chairman Mr. Yan Zhi Qing said, "During the first half of the year, the Group reported continuous growth in its air transportation business, with significant improvement in 'revenue passenger kilometers' ("RPK"), passenger load factor and aircraft utilization rate. Meanwhile, the Group's operating profit increased remarkably during the Period, mainly attributable to the decrease in operating cost per unit of "available tonne kilometers" ("ATK") resulted from fuel cost decrease and the Group's continued and stringent cost control efforts."

During the Period, the Group's total traffic revenue was RMB 8,344 Million, an increase of 5.6% as compared to the same period last year. Total traffic volume increased by 15.5% to 1,674 Million "revenue tonne kilometers" ("RTK"). The aggregate utilization rate of the Group's Boeing and Airbus aircraft was 9.71 hours, representing an increase of 6.9% as compared to the same period last year. 

Passenger revenue, representing 91.3% of the Group's total traffic revenue, amounted to RMB 7,619 Million, up 5.7% as compared to the same period last year. Passenger traffic volume increased by 16.5% to 13,985 Million in RPKs. Cargo and mail revenue, representing the remaining 8.7% of total traffic revenue, was RMB 726 Million, up 4.6% as compared to the same period last year. 

Cargo and mail volume increased to 425 Million RTKs from 377 Million RTKs as compared to the same period last year, mainly due to increased demand for domestic and international cargo transportation.

During the Period, the Group's total operating expenses increased by 3.6% to RMB 7,732 Million as compared to the same period last year. The increase was primarily due to the net effect of increases in aircraft insurance and aircraft repairs and maintenance expenses, which offset the gain from lower fuel costs. 

However, as the increase of the Group's turnover was greater than increase of its operating expenses, operating profit of the Group for the first half of the year increased by 36.5% to RMB 826 Million, as compared to the same period last year. 

Looking ahead, Mr. Yan Zhi Qing said, "With positive factors such as recovery of the aviation market in the Asia Pacific Region, the continued economic development of the PRC's domestic economy and the persistent effort of the PRC government to regulate domestic market competition, the overall revenue level of domestic airlines will be maintained and stabilized. The Civil Aviation Administration of China continues to encourage consolidation and restructuring of the domestic airlines. As one of the leading airlines in the PRC, China Southern Airlines will participate actively in the consolidation and restructuring of the industry. However, negative factors such as intensive competition both within and outside of the country, increase in fuel prices and fluctuation in the exchange rate of Japanese yen and US Dollar will result in a challenging operating environment in the second half of the year. To enhance the Group's operating efficiency and competitiveness, we will continue to expand our route networks and to increase our market shares."

The Group continues to rank first among Chinese airlines in terms of volume of passenger traffic, number of scheduled flights per week, number of hours flown, number of routes and size of aircraft fleet. 

As at June 30, 2002, the Group operated 323 routes, of which 263 were domestic routes, 21 were Hong Kong routes, and 39 were international routes. As at June 30, 2002, the Group operated 2,907 scheduled flights per week and has operations in 87 cities. 

As at June 30, 2002, the Group operated 111 aircraft, of which 92 were Boeing and 19 were Airbus aircraft.