China Southern Airlines' loss was as high as RMB843 million in the first half of 2005, while it earned RMB333 million profit in the same period of in 2004.

China Southern Airlines said the loss was mainly caused by the increasing fuel prices and the expansion of the airline fleet. Fuel cost constituted 30% of Southern Airlines' total operational cost.

During the first half of the year, the operational expenditure of China Southern Airlines reached RMB9.84 billion, an increase of 76.6% compared with the same period last year. Of that total, RMB5.549 billion was fuel costs, an increase of 104.6% compared with the same period in 2004.

China Southern Airlines purchased the services and assets of  China Northern Airlines and Xinjiang Airlines at the end of 2004. As a result, it has had to spend more money on readying and maintaining the crews and airline fleet.

China Southern Airlines says it plans to limit costs and make use of its large scale in the second half of 2005 to eliminate further losses.