China Southern Airlines plans to cut costs by 1.3 billion yuan (US$190.4 million), including reducing executive pay, this year to offset rising fuel costs.
It will cut operating costs by 500 million yuan and infrastructure investments by 800 million yuan to achieve the target, the country's largest carrier by fleet size said in an e-mail yesterday.
The carrier's savings plan also includes reducing executive pay by 10 percent in the second half of this year.
"The country's aviation market reported an uncommon loss because of the slowing global economy, snowstorms, the earthquake in Sichuan, climbing fuel prices and tightened security measures for the Olympic Games," the company said.
The aviation fuel price on the Chinese mainland has reached 8,720 yuan per ton, about four times higher than in 2005, after China Aviation Oil, the nation's sole jet-fuel provider, raised domestic jet-fuel prices by 720 yuan per ton from this month.
The increase is expected to add 1.86 billion yuan to China Southern's operating costs this year even after it raised fuel surcharges on domestic and short international routes by as much as 50 percent earlier this month, the company said.
Global airlines may report combined losses of US$6.1 billion this year, the worst since 2003, as spiraling fuel costs and slowing economies wipe out earnings, according to the International Air Transport Association.
IATA, whose members account for 93 percent of international traffic, cut its forecast for a fourth time in nine months after oil prices rose 42 percent in six months.
