Turning losses into profits in the first year and reaching the top—how does China Southern Airlines turn frugality into a competitive advantage?

Ask AI · How do China Southern Airlines’ precision fuel-saving initiatives unlock more than 2 billion yuan in profit?

Produced by | Read Business Era

Editors | Li Xiaoyan

From a net loss attributable to shareholders of 16.96 billion yuan in 2024, to achieving a net profit attributable to shareholders of 8.57 billion yuan in 2025, China Southern Airlines has carried out a typical “counter-cyclical repair.” Among the three major carriers, it was the first to turn profitable and topped the earnings chart in one fell swoop. In its precise balancing of costs and returns, China Southern Airlines has carried through the entire process an operating logic of “spending small to achieve big,” using the minimum resource input to generate the maximum operating return.

The financial report shows that in 2025, China Southern Airlines’ operating revenue reached 182.256 billion yuan, up 4.61% year over year. Meanwhile, its main business cost rose only 2.89% year over year, with a growth rate significantly lower than that of revenue; the unit cost per seat-kilometer fell to 0.42 yuan, down 4% year over year, and the cost per available ton-kilometer dropped to 2.97 yuan, down 3.26% year over year. Even with the fleet size expanding to 972 aircraft, up 6% year over year, and capacity steadily deployed, China Southern Airlines still relied on the “revenue barely rising, costs slowly increasing” scissors gap. From every operational detail, it “scraped out” profit room, ultimately realizing a net profit of 8.57 billion yuan, turning its “thrift and frugality” operating philosophy into tangible profit advantages.

As aviation fuel is a core expense accounting for more than 32% of China Southern Airlines’ total cost, there is no doubt it is the first battlefield for cutting costs and improving efficiency. In 2025, international oil prices fell back. The Brent crude average price was about 74 USD per barrel, down notably from 80 USD in 2024. China Southern Airlines seized this market window with precision, and advanced precision fuel-saving initiatives in parallel to produce a dual cost-cutting effect of “market tailwinds + internal control.” By optimizing flight plans, it prioritized the most fuel-efficient routes and economical cruising speeds, achieving a fuel-saving rate exceeding 3% per flight. It promoted ultra-thin seats to reduce seat weight by 2 kilograms per seat, while simplifying onboard spare parts configuration, driving the entire fleet to save over 10,000 tons of fuel across the full year. With the help of precise hedging and risk management operations, it effectively offset the risk of oil price volatility. As a result, annual aviation fuel cost fell to 52.53 billion yuan, down 4.48% year over year. Just this item alone directly boosted profit by more than 2 billion yuan.

In addition to aviation fuel costs, China Southern Airlines also took cost control in every expense category to the extreme. On the management expense side, it advanced tenure-based contract management, strongly tying subordinate units’ compensation to operating performance, compressing every unnecessary expenditure, bringing the management expense ratio down to 2.1%. On the financial expense side, it seized a favorable time when the RMB appreciated, realizing foreign exchange gains of 345 million yuan, reducing losses and increasing profit by 12.57 billion yuan year over year, effectively offsetting pressure from debt interest. On the maintenance expense side, it shifted from traditional “repair after the fact” to “predictive maintenance.” Relying on its independently developed “Tiantong” aircraft health monitoring system, it monitored aircraft operating status in real time. This lowered the rate of unplanned downtime at stations by 40%, keeping maintenance cost growth controlled at 6.89%, far below the rate of fleet expansion.

When it comes to fleet renewal, China Southern Airlines is even more committed to a practical path, refusing the “big-spending” approach of blindly purchasing new aircraft types. Instead, it has taken the route of “low-cost iteration + domestic substitution.” In 2025, it introduced 8 C919 aircraft and expanded the ARJ21 fleet. The purchase price of this domestically made large aircraft is 8%–17.5% lower than comparable Airbus and Boeing models, and its fuel efficiency is 12% higher. Although its initial daily utilization rate was lower than the fleet average, after large-scale operations, maintenance costs are expected to decline by 30%, laying the groundwork for long-term cost reduction. At the same time, China Southern Airlines precisely matched capacity with market demand: it deepened domestic trunk routes with narrow-body aircraft, ARJ21 covered the regional feeder market, and wide-body aircraft focused on high-yield international routes, avoiding waste from “using big capacity for small needs,” so that every aircraft can deliver the maximum operating value.

If, on the cost side, extreme cost reduction is China Southern Airlines’ “stabilizing cornerstone” for profitability, then on the revenue side, precise deployment is its core lever for “spending small to achieve big.” In its international route layout, China Southern Airlines discarded the aggressive mindset of “chasing everything and trying to capture too much,” and instead adhered to the principle of “mature one and deploy one.” Throughout the year, it newly opened and resumed service on more than 40 international routes. It focused on intensifying mature routes such as Sydney and London, and international capacity increased by 18% year over year. Additionally, benefiting from the continued recovery of cross-border business and tourism demand, China Southern Airlines’ international passenger turnover volume rose 19.57% year over year, while revenue increased 15.15%.

Beyond passenger transport, cargo operations are an even bigger profit pillar for China Southern Airlines. Unlike other airlines’ aggressive strategies of adding large numbers of freighters, China Southern Airlines has stuck to an asset-light operating model. It fully leveraged the belly-cargo capacity of its existing 972-aircraft fleet, complemented by a small number of dedicated freighters, to build a global cargo network. At the same time, it focused on high-margin segments such as cross-border e-commerce and pharmaceutical cold-chain logistics. As a result, the cargo business gross margin reached 30.10%. Full-year cargo revenue was 19.67 billion yuan, up 5.2% year over year. Among them, China Southern Airlines’ logistics arm maintained an annual net profit of 3.5 billion yuan to…

In its digital transformation, China Southern Airlines built an enterprise-level large model and launched 417 intelligent agents. By using intelligent scheduling, it reduced human resource waste by 30%; intelligent operations and maintenance reduced the losses caused by failures. With technology-driven means, it achieved the goal of “saving big money.” It also promoted cross-airline services such as “one ticket for the whole journey” and “baggage check-in at departure, with claim-free transfer,” improving passenger experience while lowering service costs and further boosting customer repurchase rates.

In 2026, China Southern Airlines may continue the operating logic of “spending small to achieve big.” It is expected that the C919 fleet size will reach 10 aircraft, and the ARJ21 fleet will exceed 30 aircraft. This will further spread out procurement and maintenance costs, releasing long-term cost-reduction potential. Several institutions predict that China Southern Airlines’ net profit attributable to shareholders in 2026 may reach 5.0–8.5 billion yuan, and its profitability advantage will further expand.

The aviation industry has never been short of cyclical tailwinds; what it lacks is the ability to ride through the cycle. China Southern Airlines has taken “thrift and frugality” from a traditional virtue and upgraded it into a replicable, quantifiable operating system. At the watershed point of industry recovery, compared with “making more money,” what determines the final ranking is “being able to keep control.”