Net profit hit 5.96 billion yuan (US$950 million) on an 11% increase in revenue to 127 billion yuan, the Guangzhou-based airline said in a filing late Monday to the Hong Kong stock exchange, where it is listed.
Sales from domestic routes, which make up three-quarters of the company’s passenger revenue, grew 10.3% as China continued to post solid economic growth, the company said.
International revenue increased 9.14% as the world economy picks up strength.
“In 2017, (against) the background of the global economic recovery, China civil aviation’s international and domestic markets witnessed rapid growth,” the filing said.
The stronger yuan — which rose more than 6% against the greenback in 2017 — also helped by making it less expensive for the carrier to repay dollar-denominated debt incurred via aircraft purchases.
Shares in the firm initially jumped early Tuesday but by late morning was down at HK$8.72, though its Shanghai-listed stock was up 0.10% to 10.06 yuan.
The country’s top three government-controlled airlines — including flag-carrier Air China and Shanghai-based China Eastern — have renewed their focus on the booming domestic market after previously expanding overseas routes.
China is now the world’s second-largest aviation market, and increasing demand for air travel among the growing middle class is expected to push it past the United States as the top market in the years ahead.
China Southern doubled its domestic passenger flight capacity growth to 8% in 2017, while almost halving the pace of international expansion to 14%.
Last year, American Airlines, the world largest carrier by scheduled passengers, bought US$200 million worth of China Southern stock, the first step in a planned “long-term relationship” between the two.
The purchase gave American 8.83% of China Southern’s Hong Kong-listed shares.
The tie-up will allow American to tap into China’s rapidly growing market, while boosting China Southern’s ambitions of raising its global profile, including in the United States.
Air China and China Eastern are expected to release their earnings later in the week.