Three Chinese airlines still suffered heavy losses last year

Despite strong revenue growth, the three giants Air China, China Eastern and China Southern Airlines still lost more than $1.7 billion last year.

According to recently announced business results, China's national airline Air China recorded a total revenue growth of nearly 167% in 2023 to 141 billion yuan, equivalent to 19.5 billion USD. Of which, revenue from international air transport increased by 346%. However, Air China's expenses also increased by nearly 60%, to 146 billion yuan.

That left China’s largest airline still with a loss of 1 billion yuan, or about $141 million, last year, a sharp drop from a loss of $5.4 billion in 2022.

China Eastern’s revenue also increased more than 145% to about $16 billion. But high costs still left the company with a negative profit of 8.8 billion yuan, or $1.38 billion.

China Southern Airlines lost 1.56 billion yuan, nearly 200 million USD. The previous year, the airline lost 6.37 billion USD. Thus, the three largest airlines in China lost a total of more than 1.7 billion USD last year.

According to Nikkei , these three airlines are falling behind in the context that smaller domestic rivals and airlines in the Asian region have significantly improved their post-pandemic profits.

Hainan Airlines, Spring Airlines and Juneyao Airlines have not yet announced their business results, but have forecast that they could make a profit of 300 million to 2.3 billion yuan in 2023. This partly reflects the reality of China's tourism aviation market after Covid-19. The three major airlines of this country have previously focused mainly on the domestic market rather than the international market.

While Chinese consumers are now traveling domestically more due to the sluggish economy , the total number of visitors to China last year was only a third of 2019.

In Asia, airlines competing with the three Chinese giants on international routes also had more positive results. Japan Airlines is expected to make a net profit of 530 million USD, All Nippon Airways about 860 million USD. Cathay Pacific made a profit of more than 1.1 billion USD.

But analysts say the worst is over for Chinese airlines. Profits for China’s three major airlines are expected to return to positive territory in 2024, ranging from 6.1 billion to 9 billion yuan, according to QUICK-FactSet. In January, HSBC said Chinese airlines were on track to post record profits of perhaps 20.4 billion yuan, or nearly $2.9 billion.

Tu Anh (according to Aviation Week/Nikkei)

Source link