China’s Top Airlines Improve Balance Sheet in Q1; Outlook Positive for May Day

Yomiuri Shimbun file photo
China’s national flag

BEIJING (Reuters) – Two of China’s top three state-owned airlines reported narrower losses in the first quarter as international travel gradually returns after the pandemic and said they would add more international flights on an expected pick up in demand.

China Eastern Airlines 600115.SS and the country’s flag carrier Air China 601111.SS posted losses, while China Southern Airlines 600029.SS swung back to a profit in the period.

Analysts said the industry is still recovering from the after-effects of the pandemic, and expected the second quarter to bring further improvement, with travel demand during the five-day Labour Day holiday starting on Wednesday expected to be strong.

Since the end of March, Chinese carriers have been working to speed up the reopening of international routes ahead of the peak summer travel months.

China Eastern said the number of international flights has returned to 90% of 2019 levels, while China Southern said its international flights during the summer are expected to rise to 80% of pre-pandemic levels.

The Civil Aviation Administration of China said at the beginning of the year that overseas flights were expected to return to 80% of pre-COVID levels by end of the year.

To meet with an expected increase in long-term demand, all three state-owned carriers are snapping up the homegrown narrow-body C919 aircraft.

On Monday, Guangzhou-based China Southern said it would buy 100 of the planes at a catalog price of $99 million each, and the jets would be delivered between 2024 and 2031.


Last week, Air China announced an order of 100 of the extended range version of the C919, whose catalog price is $108 million each.

China Eastern, the first user of the C919 and which is now flying five of them, said in April that it plans to receive another six this year.

Domestic internal flight demand has now topped pre-COVID levels, although the more lucrative international trips have lagged, weighing on results.

Average daily aviation trips will be 1.87 million during the May holiday, a rise of 4% year-on-year, and growth of 20% compared with pre-pandemic levels, according to a research note by Shenwan Hongyuan Securities issued last week.

China Eastern booked a loss of 803 million yuan ($110.90 million), narrower than the loss of 3.8 billion yuan in the same period a year ago, while Air China posted a net loss of 1.7 billion yuan on Friday, which is also less than the loss of 2.9 billion in the first quarter of 2023.

China Southern reported a profit of 756 million yuan from a loss of 1.9 billion yuan in the same quarter last year, the company said on Monday after the market closed.

During the Qingming holiday, a three-day vacation at the beginning of April, the average spending per trip reached 453 yuan, 1.1% higher than in 2019.

The increase, although small, was the first that exceeded pre-pandemic levels, boosting hopes for the Labour Day break.

$1 = 7.2414 Chinese yuan renminbi