China’s three major state-owned airlines are expected to have a combined loss of more than 100 billion yuan

China’s three major state-owned aviation companies are expected to have a combined loss of more than 100 billion yuan. Based on reports from China News Service and Securities Times, China’s three leading airlines, Air China Co., Ltd. (hereinafter referred to as “Air China”), China Eastern Airlines Co., Ltd. (hereinafter referred to as “China Eastern Airlines”) and China Southern Airlines Ltd. (hereinafter referred to as “China Southern Airlines”) released its latest performance forecast on Monday (January 30) evening. The three airlines are expected to have a combined loss of more than 100 billion yuan (RMB, the same below, about S$19.4 billion) in 2022.

According to the announcement, Air China expects a net loss of about 37 billion to 39.5 billion yuan in 2022; China Eastern Airlines expects a net loss of 36 billion to 39 billion yuan in 2022; China Southern Airlines expects a net loss of 30.3 billion to 33.2 billion yuan in 2022.

According to this calculation, the total net loss of China’s three major state-owned airlines last year was between 103.3 billion yuan and 111.7 billion yuan. The loss of leading airlines has further expanded compared with 2021. In 2021, the annual net losses of Air China, China Eastern Airlines and China Southern Airlines will be 16.64 billion yuan, 12.214 billion yuan and 12.103 billion yuan respectively.

Regarding the reason for the expected loss in performance, Air China said that in 2022, due to the continued impact of the COVID-19 epidemic, passenger travel demand will be at a low level. The markets of the company’s main bases have been repeatedly impacted by the epidemic, especially in the Beijing market, where the capacity investment and total turnover have dropped to the lowest level since the epidemic.

At the same time, due to multiple unfavourable factors such as high oil prices and exchange rate fluctuations, it is more difficult for the company to improve its operations, and investment companies related to its main business have also been seriously affected.

China Eastern Airlines said that in 2022, due to the continuous impact of the epidemic, the civil aviation industry will fall into a continuous trough. Headquartered in Shanghai, the company has experienced severe challenges from the impact of the epidemic.

At the same time, high international oil prices and the depreciation of the RMB against the US dollar have further aggravated the company’s cost pressure. Affected by the impact of the epidemic and other unfavourable external factors, it is expected that the company’s operating performance in 2022 will continue to suffer losses.

China Southern Airlines said that during the reporting period, China’s civil aviation industry was affected by multiple shocks such as repeated epidemics, high oil prices, and devaluation of the renminbi, and the industry situation was severe and complicated.

In 2022, the company’s transport capacity input and revenue passenger kilometres will decrease by approximately 28.1% and 33.0% year-on-year, respectively, and decrease by approximately 55.3% and 64.2% respectively compared with 2019. Affected by multiple factors such as the epidemic, the company’s operating performance in 2022 will continue to suffer losses.