On August 30th, according to Cailian Press, in the first half of this year, the civil aviation market gradually recovered, and China Southern Airlines (600029.SH) reduced its losses by 57.29% year-on-year in performance, with its subsidiary Southern Logistics becoming an important support for the company's loss reduction in performance. Vice Chairman and General Manager of the company, Han Wensheng, responded to questions from Cailian Press reporters at today's earnings conference, stating that in the first half of the year, stable aviation freight prices were influenced by factors such as the Red Sea crisis and strong cross-border e-commerce demand; at the same time, with the gradual recovery of international passenger flights, there was a significant increase in the volume of belly cargo and transportation revenue on passenger planes, resulting in steady growth in the overall operation of China Southern Airlines Logistics.

At the earnings conference, the company's management also provided answers to questions regarding investors' concerns about capacity layout, interest rate cuts impact, cost outlook, and other issues.

Since the beginning of this year, the civil aviation travel market has continued to recover, with China Southern Airlines reducing losses in operating performance in the first half of the year year-on-year. However, operationally, it still faces pressures such as incomplete repair of international routes, oversupply in the domestic market, frequent occurrences of extreme weather, and high and fluctuating oil prices.

Financial data shows that China Southern Airlines achieved operating revenue of 84.79 billion yuan in the first half of the year, an 18.04% year-on-year increase; a net loss of 1.228 billion yuan, compared to a loss of 2.875 billion yuan in the same period last year; and a net cash flow from operating activities of 15.71 billion yuan, a 20.56% year-on-year decrease.

Regarding subsidiaries, according to the 2024 interim report disclosed by China Southern Airlines on the operating conditions of its main holding companies, China Southern Airlines Logistics Co., Ltd. achieved a year-on-year net income growth of over 30% in the first half of this year, reaching 1.712 billion yuan, making it the most profitable subsidiary of China Southern Airlines. In addition, Xiamen Airlines and Shantou Airlines achieved a net profit of 0.318 billion yuan and 6 million yuan respectively in the first half of the year, while Zhuhai Airlines, Guizhou Airlines, Chongqing Airlines, and Henan Airlines incurred losses.

"Currently, China Southern Airlines' international and Hong Kong, Macau, and Taiwan flights have overall recovered to about 80% of the same period in 2019." Han Wensheng stated that in the second half of the year, China Southern Airlines will strive to fully restore routes to Australia-New Zealand, Southeast Asia, and other regions, as well as expand its route network in countries along the "Belt and Road Initiative" such as Europe, the Middle East, and Central and West Asia.

At the earnings conference, an investor asked, "With the increase in international routes for China Southern Airlines' freight services, what are the future prospects?"

Li Xiao, chairman of China Southern Airlines Logistics, said that with the recovery of the global freight market and the strong emergence of cross-border e-commerce, as well as China's accelerated industrial upgrading, the demand for air cargo transportation will further increase, and more breakthroughs are expected in professional tracks such as high-end manufacturing, temperature-controlled medicine, and transportation of high value-added products.

In terms of costs, China Southern Airlines' main business costs in the first half of this year increased from RMB 65.397 billion in the same period last year to RMB 76.519 billion. The fuel costs, takeoff and landing service fees, and catering and supply costs increased by 22.32%, 31.02%, and 90.28% respectively compared to the same period last year.

Regarding the outlook for costs such as takeoff and landing, Chen Dong, CFO of China Southern Airlines, said that in 2024, due to production recovery, international ground service price increases, and domestic airport fee increases, China Southern Airlines' ground service fees will face significant upward pressure.

In terms of the impact of interest rate cuts, Han Wensheng stated that the start of an interest rate cutting cycle by major global economies may have several impacts: first, it may help reduce the level of interest rates on foreign currency interest-bearing debt and may bring exchange gains; second, travel demand may increase due to economic stimulus policies, boosting international route revenue; third, oil prices may fluctuate due to interest rate cuts. China Southern Airlines will closely monitor the market to adapt to changes in costs.