China Southern Gains After Airline Says First-Half Profit May Rise 5,000%
China Southern Airlines Co., the nation’s biggest airline by fleet size, rose to the highest in almost three months in Hong Kong after saying first-half profit may have risen 5,000 percent.
The carrier jumped 3.6 percent to close at HK$3.77 in Hong Kong, the highest level since May 6. The shares added 0.3 percent to 7.39 yuan in Shanghai.
Demand for aviation services is gaining on a rebound in the domestic economy, China Southern said in a filing to Hong Kong’s exchange yesterday. The global airline industry may post combined net income for the first time in three years as travel demand revives this year after the worst recession in more than six decades, according to the International Air Transport Association.
“Air travel and transport demand is on an accelerated pace of growth,” analysts including Zhang Xinye at China Minzu Securities Co. in Beijing, wrote in a note to clients today. “Chinese domestic airlines in the first-half saw increased passenger demand and ticket prices are also on the rise.”
China Southern, which reported a net income of 25 million yuan ($3.7 million) for the first half in 2009, also improved operational efficiency, according to the filing.
The carrier will also report in the first half a gain from the disposal of its stake in MTU Maintenance Zhuhai Co., it said. The airline said in April it sold the 50 percent stake for 1.6 billion yuan.
Last year, the carrier’s first-half profit slumped 97 percent as increased passenger numbers failed to offset a lack of currency gains.
To contact the reporter on this story: Wing-Gar Cheng in Hong Kong at wgcheng@bloomberg.net
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