China’s largest airlines have biggest slump in earnings since 2008 crisis with industry predicting worse to come

Earnings at Air China, China Southern, China Eastern collapsed last quarter amid pandemic as travel demand evaporated

Hope on Labour Day recovery may be short-term respite as China Southern sees more negative impact in fist half results

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Air China planes are seen parked on the tarmac at Beijing Capital Airport in March. China will drastically cut its international flight routes as demand shrinks due to the spread of the Covid-19. Photo: AFP

Published: 12:16pm, 30 Apr 2020Updated: 10:43pm, 30 Apr 2020

China’s three largest airlines recorded their steepest quarterly losses since the global financial crisis following a slump in travel demand as the coronavirus pandemic triggered border closures across the globe.

Air China, China Southern Airlines and China Eastern Airlines reported combined losses of 14 billion yuan (US$2 billion) in the three months ended March, deteriorating from 7.4 billion yuan of profits a year earlier, according to results published late Wednesday.

The latest reports offer a foretaste of things to come for the industry as the aviation guild the International Air Travel Association (IATA) predicts more pain ahead for its 290 member airlines. Reports this month showed bankruptcies among regional carriers are mounting while even established carriers from Lufthansa to Virgin Atlantic and Singapore Airlines are turning to governments for financial lifeline.

“The losses in the first quarter is huge, so it would be challenging for them to make up for it in the remaining quarters,” said Toliver Ma, analyst at Guotai Junan Securities. Prolonged travel bans would further hammer their international routes, while domestic restrictions would also limit their recovery, he added.

Air passenger volume may contract 48 per cent in 2020, with 4.5 million flights cancelled through June 30, resulting in US$314 billion in lost revenue for global airlines, IATA said. In March, passenger demand fell to a 14-year low with Asia-Pacific carriers bearing the brunt of it.

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