China’s three largest airlines are forecast to remain loss-making for the fourth consecutive year, despite the removal of most of the country’s ‘zero-Covid’ restrictions.
In separate filings, the ‘Big Three’ – comprising Air China, China Eastern Airlines and China Southern Airlines – blamed a slower than expected international traffic recovery, coupled with “intensified” competition among domestic carriers.
Still, they expect to dramatically shave their annual net losses for 2023, compared to the record losses seen in the prior year.
China Eastern notes that while domestic travel demand recovered steadily, international traffic “is still struggling with many challenges”. The Shanghai-based carrier cites factors such as “traffic rights, visa policies, lack of supporting resources of some routes” for the slower recovery.
It states: “2023 was a year for the economy to resume development after three years of Covid-19 pandemic prevention and control, and in the year, the domestic economy was recovering well and the domestic civil aviation passenger transportation market was showing a steady recovery trend. However, the international passenger transportation market is still struggling with many challenges.”
Similarly, Air China blames factors like the “incomplete recovery” of international routes, as well as “intensified competition in the domestic market and fluctuations in oil prices and exchange rates”.
The Star Alliance carrier expects to post an attributable net loss of between CNY0.9-1.3 billion ($127-167 million) for the year to 31 December 2023, compared with a CNY37 billion net loss in 2022.
China Eastern, meanwhile, forecasts an annual net loss of between CNY6.8-8.3 billion, against a CNY37.3 billion net loss in the year-ago period.
As for China Southern, it expects a net loss of between CNY3.5-4.7 billion in 2023, versus a 2022 net loss of CNY33 billion.
It adds that while “multiple unfavourable impacts” have “gradually receded” in 2023, it is “still facing greater operating pressure”, citing similar reasons to its compatriots. The Guangzhou-based carrier – which eked out a small profit in the first half of 2023 – also flags the ongoing supply chain disruption affecting the aerospace sector globally, noting that that has driven prices of aircraft and materials “significantly”.
