China’s three largest airlines have reported narrower losses in the first quarter, as both domestic and international travel picked up following the country’s relaxation of strict COVID restrictions and reopening of its borders. Shanghai-based China Eastern Airlines Corp Ltd, China’s third-largest carrier by revenue, reduced its first-quarter loss to 3.8 billion yuan ($549.3 million) from 9.3 billion yuan in the last three months of 2022.
China Southern Airlines Co Ltd, which had a massive 15.1 billion yuan loss in the final quarter of 2022, reported a 1.9 billion yuan net loss. Simultaneously, flagship carrier Air China Ltd reduced its quarterly loss to 2.9 billion yuan from 10.5 billion yuan.
Accelerating Recovery and 737 MAX Deliveries
In March, the three major airlines significantly increased flights, with Air China’s number of domestic and international trips offered surpassing that of the same month in 2019, before the pandemic. Although domestic travel in China has rebounded, international flights are still only at a third of pre-COVID levels, according to Flight Master data, hindering a broader recovery for the sector.
Investment bank CICC expects the recovery of international routes to accelerate in the second quarter, adding that the pace “might be faster than market expectations.” CICC predicts that international and regional flights, including routes to Macau and Hong Kong, will reach 60% of 2019 levels during the summer season.
China’s aviation authority aims for a recovery to about 75% of pre-pandemic levels overall this year and to break even with a total of 460 million passenger trips. This goal contrasts with 252 million passenger trips in 2022, as per data from the transport ministry.
In March, both China Eastern and China Southern announced they would resume taking deliveries of Boeing 737 MAX jets this year after the aircraft was grounded in 2019 due to two fatal crashes. Last week, Reuters reported that China issued an update of its 737 evaluation report on April 14, allowing carriers to take deliveries of the jet. Hainan Airlines plans to take delivery of 14 MAX planes from lessors between 2023 and 2026, marking the first Chinese carrier to announce new plans to add the airline to its fleet since the grounding.
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