Chinese Airline Losses Narrow in Third Quarter
China’s aviation industry continued suffering from the fallout of the Covid-19 pandemic with net losses extending into the third quarter, although reviving domestic business helped some companies return to the black.
The six largest listed airline companies in China reported a combined net loss of 42.9 billion yuan ($6.4 billion) for the first nine months this year, extending the 39 billion yuan net loss of the first half, company financial reports showed.
The top three state-owned carriers — Air China Ltd., China Eastern Airlines Co. Ltd. and China Southern Airlines Co. Ltd. — posed combined losses of 26.7 billion yuan.
Hainan Airlines Co. Ltd., the flagship carrier of debt-ridden HNA Group, topped the ranking of private airlines with 15.6 billion yuan of net loss during the first three quarters, followed by Juneyao Air and Spring Airlines Co. Ltd.
All six airlines reported year-on-year declines in revenue for the first three quarters, with drops between 41% and 65%, reflecting depressed air travel amid the pandemic.
But combined losses narrowed in the third quarter as the waning outbreak enabled domestic business to revive. China Southern returned to the black in the third quarter with net profit of 700 million yuan as did Juneyao Air with net income of 190 million yuan and Spring Airlines with 260 million yuan, according to the companies.
As China largely brought the domestic Covid-19 outbreak under control, air travel within the country has gradually rebounded since the summer. Passenger volume on domestic routes nearly returned to normal level in the third quarter.
In September, a total of 371,000 domestic passenger flights were operated, more than double the figure of the same time last year. Airlines transported 47.8 million passengers domestically in September, equivalent to 98% of volume a year ago. Cargo transport totaled 665,000 tons, 96.4% of last year’s level, data from the Civil Aviation Administration of China showed.
However, airlines’ international traffic remained largely frozen under China’s strict controls on international flights amid lasting concerns over imported cases.
Fewer than 300 international passenger flights were scheduled weekly in October, compared with nearly 9,000 daily before the pandemic. International passenger volumes at major airports in Shanghai, Guangdong and Shenzhen dropped more than 90% from a year ago.
Although domestic demand supported airlines’ business revival, the sluggish recovery of international traffic and deep cuts to ticket prices to lure travelers will lead to continued declines in airlines’ revenues, Tianfeng Securities said in a research note. The brokerage said it will take a while longer for international air travel to rebound.
Major airlines stepped up fundraising this year to ease capital pressures amid the business slowdown. By the end of September, Air China had total liabilities of 81.6 billion yuan, 55.7% more than the same time a year ago. The debt overhang for China Southern and China Eastern also grew significantly.
Contact reporter Han Wei (email@example.com) and editor Bob Simison (firstname.lastname@example.org).
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