The Big 3 Chinese Airlines Post Profit Warning As Passenger Numbers Increase

The big three Chinese airlines have posted profit warnings as a result of the COVID-19 pandemic amid rising passenger demand. Air China, China Eastern, and China Southern combined take up the lion’s share of passengers in China and have steadily seen their passenger numbers increase, although still far lower than what it was back in 2019.

Chinese airlines
The big three Chinese airlines are seeing a recovery, but it is turning out to be slow with international demand way down. Photo: Getty Images

China Southern

China Southern’s June 2020 passenger capacity was down 20.15% for domestic routes, 93.75% for regional routes and 93.75% for international routes compared to June 2019. Overall capacity was down 43.92%. Meanwhile, passenger traffic was down 33.48% domestically, 98.38% regionally, and 95.20% internationally, which corresponds to a 53.34% decrease in overall passengers compared to June 2019.

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SWISS, Beijing, Daxing Airport
Amid substantial travel restrictions, China Southern’s international capacity remains very low. Photo: Getty Images

The carrier operated a total of 857 aircraft split across the following:

  • 5 Airbus A380s
  • 6 Airbus A350s
  • 46 Airbus A330s
  • 311 Airbus A320s
  • 37 Boeing 787s
  • 29 Boeing 777s
  • 401 Boeing 737s
  • 2 Boeing 747s
  • 17 Embraer 190s
  • 3 COMAC ARJ21s

China Southern carried a total of 7,138,620 passengers, with over 7.081 million flying domestically. While this was a 21.59% increase compared to May 2020 passengers, it was a 41.21% decrease from June 2019. The airline’s load factor was up 2.16% from May 2020 to 68.96%.

China Southern ARJ21
China Southern took its first ARJ21 in June. Photo: Getty Images

China Southern noted, however, that despite control over the COVID-19 pandemic in China and rising domestic numbers, international aviation demand still remains low as the pandemic continues to ravage other countries. While China Southern did “seize opportunities for freight revenue growth, reduce costs, and revitalize resources,” per its results viewed by Simple Flying, the airline still believes its half-year results will be adversely affected.

Air China

Air China’s passenger capacity in June 2020 was down 57.9% overall, comprised of a 28.4% decrease domestically, 95.8% internationally, and 97.1% regionally compared to June 2019. Overall, however, capacity was up 11.1% from May 2020.

Air China A330
Air China increased flights by a little more than demand increased, slightly pushing down the carrier’s June load factor. Photo: Getty Images

Air China carried fewer passengers than China Southern, with a total of 4,457,000 passengers. Over 4.4 million of those passengers were onboard domestic routes– while just under 36,000 were international passengers. This was a 9.5% overall increase in numbers from May 2020, but 51.5% below June 2019.

However, despite an increase in passengers, Air China saw a slight decrease in load factor. The airline notched a 67.1% overall load factor, which was 0.4% below May 2020. The domestic load factor decreased by 1.1%, while the regional load factor fell 1.4%. However, international load factor was up 15.3%. Essentially, the carrier added a little more capacity than demand increased.

The Air China Group (including planes at the airline’s subsidiaries) had a fleet of 700 aircraft at the end of June 2020:

  • 43 Airbus A319s
  • 247 Airbus A320/A321s
  • 65 Airbus A330s
  • 10 Airbus A350s
  • 277 Boeing 737s
  • 10 Boeing 747s
  • 28 Boeing 777
  • 14 Boeing 787
  • 1 COMAC ARJ21
  • 5 business jets
Air China ARJ21
Air China’s first ARJ21 takes off while an A350 sits on the ground. Photo: Getty Images

Like China Southern, Air China posted a similar profit warning highlighting the global COVID-19 pandemic. The airline highlighted the optimization of freight capacity, among other reactions in the results viewed by Simple Flying. However, this was not enough as the airline expects its operational results for the first half of 2020 to be significantly affected by the pandemic.

China Eastern

China Eastern outlined a 52.05% year-on-year decrease in passenger capacity with a 26.63% domestic capacity decrease, 95.76% on international routes, and 95.83% on regional routes.

China Eastern Boeing 777
China Eastern, like the other major Chinese airlines, saw far more domestic passengers than international ones. Photo: Getty Images

The airline carried 5,205,500 passengers, which was down 51.46% from the same time last year. Over 5.1 million of that was domestic. The load factor was 66.44% overall, compared to 82.78% in June 2019.

China Eastern operates 721 aircraft. Fleet changes in June saw the carrier withdraw two 737-800s while adding one ARJ21:

  • 20 Boeing 777s
  • 10 Boeing 787s
  • 7 Airbus A350s
  • 56 Airbus A330s
  • 329 Airbus A320s
  • 298 Boeing 737s
  • 1 COMAC ARJ21
OTT ARJ21 China Eastern
China Eastern set up a new subsidiary to fly its first (and future) ARJ21s. Photo: Getty Images

China Eastern also noted that there is great uncertainty due to the COVID-19 pandemic on the company’s business in China and abroad. The airline pointed out that the impact of the pandemic on its operations is still being evaluated. However, the airline is optimistic about its response to the current crisis.

What the future holds

The big three Chinese Airlines all took delivery of their first COMAC ARJ21s. All three carriers chose to outfit these planes with 90 seats in an all-economy configuration. These jets are being used on regional routes and represent one of the first steps forward for the ARJ21 as COMAC seeks to become a force in the aircraft manufacturing industry. Taking on a new aircraft shows that there is some belief amongst the three carriers that there is a rebounding air travel industry– similar to what other countries have also seen.

China carriers
The big three Chinese airlines took simultaneous deliveries of their first ARJ21s. Photo: Getty Images

What remains to be seen, however, is if there are any permanent changes to China’s market. No mergers have occurred, despite being predicted. Although, as China Eastern notes, there is still plenty of uncertainty and some carriers may look to shore up their operations.

Do numbers from the big three Chinese airlines have you optimistic about the recovery of the air travel industry? Why or why not? Let us know in the comments!