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China's top airlines post heavy Q1 losses on COVID curbs

China's top airlines post heavy Q1 losses on COVID curbs

reuters.com · 04/29/2022 07:28
China's top airlines post heavy Q1 losses on COVID curbs

- China's three biggest airlines have reported heavy first-quarter losses as prolonged COVID curbs weighed on travel demand and a weakening Chinese currency and rising fuel prices inflated costs, trends which persist in the current quarter.

Analysts expect another year in the red for Chinese airlines as Beijing sticks with its zero-COVID policy to stop the spread of the virus.

China Eastern Airlines 600115.SS, 0670.HK on Friday reported a first-quarter net loss of 7.8 billion yuan ($1.18 billion) versus 3.8 billion a year earlier. The Shanghai-based carrier lost 4.05 billion yuan in the fourth quarter of last year.

Shanghai in late March started ordering its 25 million residents to stay at home as authorities raced to contain record COVID-19 case numbers, leading to the cancellations of almost all domestic flights from the city's two airports throughout April.

Beijing-based Air China 601111.SS, the country's flag carrier, late on Thursday reported a quarterly net loss of 8.9 billion yuan, its largest since records began in 2008.

A year earlier it reported a loss of 6.2 billion yuan.

The capital city, which had put in place a strict entry policy ahead of the Olympic Games in February, is also grappling with fresh coronavirus outbreaks. Flight cancellation rates at Beijing's two airports have reached around 80%, according to data from Flight Master.

China Southern Airlines 600029.SS posted a first-quarter net loss of 4.5 billion yuan, up from 4.0 billion a year earlier.

The outlook for China's domestic summer travel season is looking bleak at a time when international travel remains effectively closed.

Air passenger traffic over the upcoming five-day Labour Day holiday, typically a high travel period, is set to fall 77% from a year earlier, China's aviation regulator has forecast. nB9N2WD043

Slack demand has delayed the return of the Boeing BA.N 737 MAX to Chinese skies, even though China's aviation regulator lifted a grounding order late last year.

"The COVID environment has put a really tough situation in play because our customers are not flying. They're down 70% in their domestic travel, and this is significant for them," Boeing CEO David Calhoun said on an earnings call on Wednesday.

($1 = 6.5895 Chinese yuan renminbi)


(Reporting by Stella Qiu in Beijing and Jamie Freed in Sydney)

((yifan.qiu@thomsonreuters.com; 86-10-66271289;))