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Airline flies into cloudy weather

AN economic recession and weak demand cast cloudy skies over China Southern Airlines which forecast a loss for last year, flying on the tailwind of China Eastern Airlines.

"China Southern has issued cost-efficient measures to save 1.3 billion yuan(US$190 million), but recovering demand is still a difficult task for the carrier this year," said China Merchants Securities Co.

The Guangzhou-based carrier attributed the loss to the economic downturn, weak demand and higher fuel prices last year, said a statement to the Shanghai Stock Exchange yesterday. It earned 1.85 billion yuan in 2007, or 0.42 yuan a share.

China Merchants Securities Co estimated that it would lose 0.19 yuan a share last year, and earnings per share would reach 0.01 yuan this year and 0.05 yuan in 2010.

China Southern flew 59.81 million passengers last year, a rise of 5.1 percent from a year earlier, and carried 870,000 tons of cargo, almost the same as in 2007. Passenger volume on the carrier's international routes slid 21.7 percent in December on an annual basis and cargo volume shrank 46.6 percent.

China Southern is the only airline that was not hit by hedging losses last year among the country's three largest carriers. It earned US$6.28 million from jet fuel hedging contracts. China Eastern said its fair-value losses on hedging deals totaled 6.2 billion yuan as of December.


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