By Lisa Barrington and Sophie Yu
BEIJING (Reuters) -China’s three biggest airlines reported deeper first-quarter losses on Tuesday from the same period a year ago, amid intensifying competition and economic pressures on consumers, and a worsening trade war with the United States.
State-owned China Southern Airlines, Air China, and China Eastern have struggled to return to a break-even position after the COVID-19 pandemic, posting five consecutive years of annual losses.
Domestic market competition, low international and business travel demand, supply chain problems, and currency depreciation are business challenges, the airlines have said.
In contrast, the industry globally rebounded to profit in 2023.
China said on Tuesday its airlines had been severely affected by the trade war between Washington and Beijing.
Air China, the country’s flagship carrier, reported a net loss of 2.04 billion yuan ($281 million) for the quarter, 22% lower than the prior-year period.
China Southern, the country’s largest carrier by capacity, moved into a net loss of 747 million yuan in the first three months of this year, having posted a comparable quarterly profit of 756 million yuan last year.
And Shanghai-headquartered China Eastern Airlines reported a quarterly net loss of 995 million yuan, down 24% from last year.
The airlines did not comment on the results.
CHALLENGES
Domestic flight capacity is starting to decline, Cirium and airline data shows, as airlines bring back more international flights and ticket prices fall.
However, China’s international capacity remains around 20% lower than 2019 levels, as domestic economic pressures and political tensions with other countries mute demand.
The aviation industry is also concerned that U.S. President Donald Trump’s tariffs may dampen global growth and, therefore, demand for passenger travel and air freight.
Asia’s export-oriented economies could see “softening passenger and cargo demand in the coming months,” Subhas Menon, the director general of the Association of Asia Pacific Airlines (AAPA), said on Tuesday.
Earlier this month, U.S. planemaker Boeing repatriated three jets back to the United States from China, saying Chinese customers would not take delivery of new planes due to tariffs.
A five-day holiday in China starting on May 1 could provide a boost for the domestic airline sector, with average prices for an economy class ticket over the period 4.4% higher than last year, according to Flight Master data.
($1 = 7.2723 Chinese yuan renminbi)
(Reporting by Sophie Yu and Lisa Barrington; Editing by Kirsten Donovan and Rachna Uppal)
