China‘s top airlines have reported losses for a fourth consecutive year as weak domestic demand in the fourth quarter and a slow post-pandemic recovery in overseas travel weighed on earnings, but analysts said the outlook was improving this year.
Their performance, while better than in 2022, reflects how slowly the Chinese aviation industry is emerging from the Covid-19 pandemic, as international travel struggles to match a recovery in domestic travel and consumers remain price-sensitive amid the country’s slowing economy.
China lifted all pandemic-related international travel restrictions at the start of 2023, one of the last countries to do so. Data from the flight tracking app Flight Master showed in March the number of international flights to and from China was at about 70 per cent of pre-pandemic levels.
Shanghai-based China Eastern Airlines on Thursday posted an annual loss of 8.2 billion yuan (USD 1.13 billion), compared with a record loss of 37.4 billion yuan in 2022.
The country’s flagship carrier Air China on Thursday reported a loss of 1.04 billion yuan in 2023, significantly narrower than its 2022 loss of 38.6 billion yuan.
In the fourth quarter, it posted a loss of 1.8 billion yuan, Reuters calculated, better than the 10.5 billion yuan loss in the same period of 2022.
Another major state-owned carrier, Guangzhou-based China Southern Airlines, reported an annual loss of 4.1 billion yuan on Wednesday, far smaller than the loss of 32.7 billion yuan in 2022. Its fourth-quarter loss of 5.4 billion yuan compared to its 15.1 billion yuan loss for the period a year earlier, Reuters calculated.
The airline, whose biggest shareholder is the Kenyan government, also said in a statement that its loss after tax had reduced to almost 23 billion shillings from more than 38 billion shillings the year before. Total revenue for the year surged by 53 per cent to 178 billion shillings, which the airline attributed mainly to a 35 per cent growth in passenger numbers to 5.04 million, according to its audited results statement.
China Southern attributed its annual loss to weak consumer spending power, jet fuel costs, supply chain problems and the depreciation of the yuan. Hopes are high the Chinese airline industry can turn a corner this year. Brokerage Guotai Junan Securities said on Monday that in January and February the percentage of seats filled by small airlines had surpassed 2019 levels while that of large carriers was also approaching pre-Covid levels.
China’s aviation regulator said in January it expected the number of international flights to and from the country to reach 6,000 per week by the end of this year, or about 80 per cent of pre-Covid levels.
In 2023, the global airline industry returned to profit on strong performances from carriers in North America, Europe and the Middle East. Airline industry group IATA expects the Asia-Pacific region to return to profit in 2024.
