China’s Big Three airlines significantly improved their financial results in Q1, thanks to the unexpected termination of the country’s zero-Covid policy in December. The resumption of (air) travel spurred demand and helped Air China, China Eastern Airlines, and China Southern Airlines to reduce their losses through March this year. China’s Big Three start to recover in Q1 from March.
Air China
Air China reported a net loss attributable to the shareholders of RMB-2.926 billion, an improvement over RMB-8.900 billion a year earlier. Operating revenues almost doubled to RMB 25.068 billion from RMB 12.918 billion.
Total expenses still exceeded revenues and were RMB 29.749 billion, up from RMB 23.145 billion in Q1 last year. The airline doesn’t specify the operating expenses like fuel costs, but total operating costs were RMB 6.6 billion up from last year to RMB 26.320 billion. The operating loss was RMB-3.295 billion, down from RMB-10.450 billion. The net cash flow from operating activities was RMB 6.796 billion.
Through the quarter, Air China’s capacity and passenger numbers saw a steep ramp-up. In January, capacity was up by 38.4 percent year on year or by 96.1 percent over December, with the number of passengers carried up by 54.1 percent to 6.8 million. In February, capacity was up 57.1 percent over the same month in 2022 and passengers carried by 63.8 percent to 7.2 million. But in March, capacity grew by 224.4 percent year on year and the number of passengers by 262 percent to 9.4 million. Yet, the load factor for March was just 69.6 percent.
China Eastern Airlines
China Eastern Airlines reported a Q1 loss attributable to shareholders of RMB-3.999 billion compared to RMB-8.269 billion. Revenues improved to RMB 22.261 billion from RMB 12.665 billion. Total expenses were up to RMB 27.205 billion from RMB 21.812 billion, of which RMB 24.183 billion are operating expenses, up some RMB 5.0 billion from last year. The operating loss was RMB-4.003 billion versus RMB-8.307 billion. The airline produced a positive RMB 6.665 billion in net cash flow from operating activities compared to RMD-4.067 billion last year.
China Eastern carried 14.4 million passengers between January and March, up from 10.5 million in the same quarter of 2022. March saw the biggest increase, as the airline carried 7.6 million passengers in a single month, up from 5.6 million year on year. The load factor for March was 73 percent or 70.2 percent for the three-month average.
China Southern Airlines
China Southern Airlines reduced its Q1 net loss to RMB-1.724 billion from RMB-4.539 billion. Revenues were up to RMB 34.055 billion from RMB 21.471 billion. Operating expenses increased to RMB 36.569 billion from RMB 28.055 billion, with operating costs up to RMB 33.294 billion from RMB 24.921 billion. The operating loss was reduced to RMB-1.467 billion from RMB-5.907 billion. The net cash flow from operating activities was RMB 8.808 billion versus just RMB 17 million in Q1 2022.
Capacity development of CS mirrors that of its two rivals, with a slow recovery in the first two months followed by a strong March. In January, capacity was up by 25.4 percent and passengers carried by 39 percent to 9.2 million. For February, the numbers are 27.5 percent, 34 percent, and 9.8 million passengers. But in March, capacity increased by 128.8 percent and pax carried by 148 percent year on year to 10 million. The load factor was 74.1 percent in March.
The Big Three suffered significant losses in 2022. China Southern reported an RMB-30.3 billion net loss, China Eastern RMB-37.4 billion, and Air China RMB-45.173 billion. The year was heavily impacted by continued lockdowns and travel restrictions that included a complete lockdown of Shanghai.
