China Southern Airlines 2025 Annual Report Analysis: Total Profit Increased by 204.30%, Net Operating Cash Flow Increased by 21.51%

Operating Revenue: Steady Growth, with International Routes Driving Performance

In 2025, China Southern Airlines achieved operating revenue of RMB 182.56 billion, up 4.61% year over year from RMB 174.24 billion in 2024. From the perspective of its business structure, the passenger business is the core source of revenue, and international routes in particular delivered strong results: the number of paid passenger kilometers on international routes increased 19.57% year over year, the number of passengers carried increased 19.53% year over year, and both became the core drivers pulling up revenue growth. However, overall revenue per paid passenger kilometer decreased 4.17% year over year, reflecting that the passenger air travel market still faces pricing competition pressure. Domestic route revenue pressure is evident, with revenue per paid passenger kilometer falling from RMB 0.48 to RMB 0.46.

Net Profit: Turnaround to Profit, with Material Contribution from Non-Recurring Items

In 2025, the net profit attributable to shareholders of listed companies was RMB 857 million. Compared with the RMB 1,696 million loss in 2024, the company turned from loss to profit. Non-recurring items excluded (adjusted) net profit was RMB 145 million, which likewise improved significantly compared with the RMB 3,948 million loss in 2024. In terms of non-recurring items, the total non-recurring gain/loss in 2025 was RMB 712 million. Of this, other operating non-recurring income and expenses contributed RMB 842 million, excluding government subsidies, and it was an important support for the turnaround to profit. This also indicates that the profitability foundation of the company’s core business still needs to be further strengthened.

Earnings per Share: Turned from Negative to Positive, with Profitability Repaired

In 2025, basic earnings per share were RMB 0.05 per share, and adjusted (non-recurring items excluded) earnings per share were RMB 0.01 per share. Both improved from the RMB -0.09 per share and RMB -0.22 per share in 2024, turning from negative to positive. The return on equity (ROE) on a weighted average basis rose from -4.72% to 2.44%. The adjusted weighted average ROE rose from -10.99% to 0.41%. This reflects that the company’s net asset profitability is gradually recovering; however, even after excluding non-recurring items, the indicators remain at a low level, suggesting room for further improvement in core business profitability.

Cost Control: Unit Costs Declined, with Overall Efficiency Improving

In 2025, the company’s main business cost per available ton-kilometer was RMB 2.97, down 3.26% year over year from RMB 3.07 in 2024, showing that cost control has taken effect. By expense category:

• Selling expenses: The annual report did not disclose separate selling expense data. But from business actions, the company optimized its customer operating system. The number of group customers and frequent travelers increased by 345 and 1,809 (respectively) year over year. By retaining customers to replace part of customer-acquisition costs, it indirectly improved efficiency on the sales side.
• Administrative expenses: The company advanced governance reforms, implemented term-based employment and contract-based management, and linked compensation of subordinate units to performance and results. This increased the level of operational refinement in management and helped reduce overall costs.
• Finance expenses: The annual report did not disclose the specific amounts. However, based on the adjustments to foreign exchange gains/losses from special borrowings arising from differences between domestic and overseas accounting standards, the company has a relatively large scale of foreign-currency borrowings, and exchange-rate fluctuations may potentially affect finance costs. Still, the amount of relevant adjustments in 2025 was small, and the finance side overall remained relatively stable.
• R&D expenses: The company added 101 invention patents. The “TianTong” system was included in the list of recommended central state-owned enterprise science and technology innovation achievements. The company also built an enterprise-level large-model platform and launched 417 intelligent agents. R&D investment focuses on digital transformation. While the company did not disclose the specific expense amount, judging by the outcomes, R&D efforts continued to increase.

R&D Personnel: Innovation Supports, Professional Teams Empower

The annual report did not disclose the specific number of R&D personnel or compensation data. However, based on R&D achievements, the company established a team of enterprise architects, strengthening technology research and breakthroughs, and laid out initiatives in areas such as AI and the Internet of Things. This indicates that the R&D team has strong capabilities for technology implementation, providing core support for the company’s digital transformation and an upgrade of its safety management system.

Cash Flow: Strong Operating Cash Flow, with Improved Financing and Investment Structure

In 2025, the company’s cash flow performance was generally steady. The three categories of cash flow showed characteristics of “strong operations, expansion in investment, and stable financing”:

• Net cash flow from operating activities: RMB 38.209 billion, up 21.51% year over year from RMB 31.445 billion in 2024. This was mainly driven by the growth in transportation production scale, with passenger transport volume and cargo/mail transport volume increasing 5.46% and 6.77% year over year, respectively, enhancing the cash generation ability of the core business.
• Net cash flow from investing activities: The annual report did not disclose the specific amount. But based on fleet data, during the reporting period the company delivered 78 aircraft and retired 23 aircraft. The fleet size net increased by 55 aircraft to 972. At the same time, it advanced the construction of digital platforms, indicating that the investment side maintained a certain level of intensity, focusing on fleet capacity upgrades and technology investment.
• Net cash flow from financing activities: The annual report did not disclose the specific amount. As of end-2025, the company’s total assets increased 6.09% year over year to RMB 349.814 billion, and net assets increased 2.45% year over year to RMB 35.580 billion. Considering that the parent company still has RMB 50.855 billion in accumulated losses that are not yet offset, which does not meet the conditions for dividends, it is reasonable to infer that financing is mainly to meet funding needs for fleet expansion and daily operating capital, with an overall relatively steady pace.

Risk Warning: Multiple External Factors Still Carry Uncertainty

The core risks faced by the company include:

1. Market risk: Slowing global economic growth and geopolitical conflicts may impact air travel demand. The cargo/passenger load factor on international routes has already declined 0.81 percentage points year over year. Fluctuations on the demand side still need to be watched.
2. Cost risk: Fuel prices and exchange-rate fluctuations will continue to affect costs. Although unit costs declined in 2025, uncertainty from external price volatility still remains.
3. Industry competition risk: The aviation market continues to see capacity being added. The decline in revenue per paid passenger kilometer on domestic routes reflects intense competition, and profitability headroom may be further compressed in the future.
4. Safety risk: Managing safety in aviation operations is challenging. Extreme weather, handling of special situations, and similar factors may still disrupt operations.

Compensation for Executives (Board, Supervisors, and Senior Management): Core Management Remuneration Details

The annual report did not disclose the specific total pre-tax remuneration amounts for core executives such as the chairman, general manager, and deputy general managers. It only disclosed that the company implemented term-based employment and contract-based management. Compensation and performance completion status of subordinate units are linked to labor efficiency. This indicates that executives’ pay structure has been tied to the company’s operating performance, which will further drive management to focus on improving the quality and efficiency of the core business.

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Responsible editor: Xiao Lang Express