China Southern Airlines : 2019 Annual results announcement

(International Financial Reporting Standards)

CONTENTS 1. Industry Overview

1. Business Overview & Operation Highlights
2. 2019 Financial Highlights
3. Future Prospect

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I n d u s t r y O v e r v i e w

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4

favorable Factors in 2019

Suffered from market fluctuation in 2019 arise from Internal and external market uncertainties

Global aviation industry facing various

opportunities and challenges

China's economy maintained stable growth

GDP increased by 6.1% YoY in 2019, of which 57.8% was contributed by consumer expenditure

Benefited from national strategies

The aviation industry benefited from national strategies such as the Greater Bay Area, coordinated development of the Beijing-Tianjin-Hebei (BTH) region, Yangtze River Delta integration, and Shenzhen's Pioneering Demonstration Zone, etc.

Further implementation of tax and fee cuts

The Civil Aviation Development Fund was halved which saved RMB780 million and the rate of basic pension insurance was reduced which saved RMB150 million.

5

Unfavorable Factors in 2019

More complicated and critical external environment

• Global trade environment deteriorated, the global GDP growth rate recorded a record low of 2.9% since 2009
• Trade talks took time and were full of twists and turns

Significant slowdown in growth of market demand

• In 2019, the growth rate of passenger traffic was 7.9%, decreased by 3 percentage points YoY.
• Downward pressure on fares increased

Exchange losses caused by depreciation of RMB

• The central parity of the RMB against the US dollar fell by 1.65% in 2019
• The addition of operating leases to financial statements amplified the impact of exchange rate fluctuations

RMB Against US Dollar

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B u s i n e s s O v e r v i e w &

O p e r a t i o n H i g h l i g h t s

2

7

Safety Position Remained Stable

Well performed in safety operation with industry-leading safety record

2.95 mn hours	26.39 mn hours		20 years		25 years
Safe Flight in 2019	Safe Flight Accumulated		Aviation Safety		Aviation Security

8

Continuous Improvement In Service Quality

Deepen the construction of large-scale operation and promote standardized management

Flight Punctuality Rate

83.3% 2.36%

Actively promote "paperless" travel and enhance travel experience for customers

Self Check-in Rate

79.3% 23.8%

Adhere to the principle of s i n c e r e s e r v i c e a n d expanded 195 "Kapok International" Selected Routes

Became the first airline to adopt electronic luggage tag service in China

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Operation Quality Steadily Improved

According to the principle of maximization of marginal contribution, optimized and adjusted 21,922 flights throughout the year.

18.3%

Revenue of

Frequent flyer

1.9%

Passenger transportation

Developed 9.22 million new members with an increase of 62% YoY, and the total number of Pearl members reached 48.96 million

Cargo transportation

Group customer revenue

The revenue of emerging businesses such as temperature-controlled and cold chain 36.9% business was 558 million yuan, up 14% YoY

Auxiliary income

10

Strengthened "Dual-hub" strategy

New Routes

Guangzhou	Changsha	Nairobi	Shenzhen	Tokyo
Guangzhou	Urumqi	Vienna	Shenzhen	Langkawi
Guangzhou	Nagoya		Shenzhen	Vientiane

Beijing

Guangzhou

Successfully completed the first trial flight at Beijing Daxing International Airport and handed over 13 routes in the first batch

Built the largest operation control center and aviation food production base at Beijing Daxing

International Airport	11

Deepened Global Cooperation

BEIJING

GUANGZHOU

Launched bilateral code-sharing cooperation with 28domestic and overseas

airlines on 531 routes, further connected to 117 international destinations

Revenue contributed by partners was 2.8 billion yuan, up 7.6% YoY

Innovatively launched "CZ Priority" service brand

Ensure the services of priority luggage, priority boarding, VIP lounge and other benefits remain unchanged for members

Launched bilateral code-sharing cooperation with American Airlines, British Airways, Finnair, Emirates, Qatar Airways, Qantas Airways and Japan Airlines, etc.

Cooperated with American Airlines on frequent flyer programs

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2 0 1 9

F i n a n c i a l H i g h l i g h t s

3

13

2019 Annual Results Highlights

	2019	vs 2018
Total Operating Revenue	RMB154,322m	+7.4%
Profit attributable to equity shareholders of the Company	RMB 2,640m	-8.8%
Basic EPS	RMB 0.22	-18.5%
EBITDA	RMB 34,520 m	+57.8%
ASK	344,062 m	+9.4%
ATK	46,434 m	+8.7%
Pax Load Factor	82.81%	+0.37pts
Overall Load Factor	70.26%	-0.73pts
Aircraft Utilization(Hr)	9.96h	+0.23h

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Operating Data

Revenue Passenger Kilometers (RPK)

millon			%
		9
		.
	9
	+

Passenger

million

		%
	4
	.
8
+

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2019 Traffic Revenue Breakdown

Revenue breakdown (Geographic)

Regional

[-]%

International

[-]%

Transportation Revenue

RMB mn

Revenue breakdown (Product)

Cargo & Mail	Passenger
[-]%	[-]%

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Traffic Revenue by Geographic Region

PAX revenue
Market Segment (PAX)	2019	vs 2018
Domestic	RMB 101,956 m	+ 6.5 %
Regional	RMB 2,436 m	-0.4%
International	RMB 34,110 m	+14.4%
Total	RMB 138,502 m	+8.2%
Cargo revenue
Market Segment	2019	vs 2018
Domestic	1,952 m	-0.2%
Regional	122 m	+4.3%
International	7,541 m	-5.2%
Total	9,615 m	-4.1%
Traffic Total	148,117 m	+7.3%

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Passenger Yield and Freight Yield

PAX Yield in RMB
Market Segment	2019	2018	Change
Domestic	0.522	0.535	-2.4%
Regional	0.748	0.740	+1.1%
International	0.395	0.388	+1.8%
Average	0.486	0.494	-1.6%
Cargo Yield in RMB
Market Segment	2019	2018	Change
Domestic	1.138	1.169	-2.7%
Regional	4.660	4.674	-0.3%
International	1.291	1.363	-5.3%
Average	1.268	1.331	-4.7%

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2019 Annual Operating Costs

	Operating Costs
	RMB million
Cost Breakdown	Jet Fuel
of 2019	Staff
	Landing and Navigation
	Depreciation and Amortization
	Airframe and Engine Maintenance
	Catering
	Operating lease
	others

2019	2018	Change
42,814	42,922	-0.3%
27,647	25,030	+10.5%
17,658	15,980	+10.5%
24,620	14,308	+72.1%
8,565	8,394	+2.0%
3,975	3,734	+6.5%
1,412	8,726	-83.8%
21,917	21,148	+3.6%

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Jet Fuel Price

Fuel Cost (RMB)	Aviation Fuel Consumption
RMB mn	KT

Monthly Jet Fuel Price (RMB/TON)			Sensitivity Performance
RMB'000

Oil price 10%	Operating Costs RMB 4,281 mn
	20

Debt Analysis

Debt Structure (RMB million Equivalent)

Term of the Debt

Exchange Rate Sensitivity Performance			Interest Rate Sensitivity Performance

RMB/USD 1%

Net Profit RMB 434mn

Interest Rate 100bp

Net Profit RMB 559mn

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Our Fleet

As of 31 December 2019

862

aircrafts

1st

in Asia

2019	Aircraft type	Operating	Finance	purchased	Total	Avg. Age	Daily Utilization
Leased	Leased	Rate
	A380	0	1	4	5	7.7	10.24
	A350	0	6	0	6	0.2	11.40
	A330	7	29	11	47	6.8	11.67
Passenger	A320	128	95	94	317	7.6	9.76
Aircraft
B787	8	25	4	37	3.2	11.78
	B777	0	14	1	15	3.2	12.40
	B737	163	82	156	401	6.5	9.71
	EMB190	14	0	6	20	7.3	8.10
Freighter	B777	0	5	7	12	7.3	13.50
B747	0	0	2	2	17.4	0.92
Total	/	320	257	285	862	6.7	9.96
	（%）	37.1%	29.8%	33.1%	100.00%	/	/
	Aircraft type（%）	Boeing	Airbus	Others	100.00%	/	/
	54.2%	43.5%	2.3%

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Delivery and Retirement Plan (2020-2022)

Aircraft type	2020			2021			2022
Delivery	Retirement	Year-end	Delivery	Retirement	Year-end	Delivery	Retirement	Year-end
	Forecast	Forecast	Forecast
Airlines
Airbus
A380			5			5			5
A350	6		12	4		16	4		20
A330		7	40			40			40
A320	30	18	329	12		341			341
Boeing
B787	5		42			42			42
B777	1		16			16			16
B737	36	1	436	48		484	39		523
Others
EMB190		11	9		3	6			6
ARJ21	6		6	8		14	8		22
Airliner Total	84	37	895	72	3	964	51	0	1015
Cargo
B777	2		14			14			14
B747			2			2			2
Cargo Total	2	0	16	0	0	16	0	0	16
Total	86	37	911	72	3	980	51	0	1031
									23

F u t u r e P r o s p e c t

4

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Development Strategy

Build a world-class airline

Promote high-quality development

Adhering to upholding high-quality development through reform and innovation

Strenuously improve safety quality

Enhance business capacity

Strengthen cost control

Promote construction of integrated operation

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Development Strategy

Build a world-class airline

Adhering to upholding high-quality development through reform and innovation

Build a first-class branding service system

Fully develop a dual hub layout

Accelerate reform in key areas

Epidemic prevention and market strategies

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Q & A

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Investor Relations - Contact Information

Website www.csair.com

Email [e-mail]

Tel	(86)	20 8611 2480	(86) 20 8611 4989
Fax	(86)	20 8665 9040
Address	No.68 Qixin Road, Baiyun District, Guangzhou, Guangdong Province PRC 510403

Disclaimer

Warning about Forward-looking Statement

This presentation contains certain forward-looking statements in relation to the financial conditions, operating results and business of the Company. These statements represent the expectations or beliefs of the Company regarding future events, and are subject to risks and uncertainties, whether known or unknown. Such risks and factors might result in significant difference between actual results, performances or events and the results, performances or events stated or implied in such statements. Certain statements, such as those including words and expressions such as "potential", "estimate", "expect", "anticipate", "target", "intend", "plan", "believe", "project" and similar phrases expressed in different forms, are regarded as "forward-looking statements". Forward-looking statements are subject to inherent risks and uncertainties. It should be noted that a number of factors might result in the actual outcome deviating from conditions expected or implied in the forward-looking statements, and in some cases such deviation might be significant. The contents of the forward-looking statements are updated as at the date on which such forward-looking statements are made, and should not be assumed to have been revised or updated to reflect latest information or subsequent events. Market trends and factors that are expected to affect the operating results of the Company are set out in the sections headed "Business Review and Outlook" and "Financial Review."

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China Southern Airlines App

Mobile App	WeChat Official
Download QR Code	Account QR Code

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