The annual losses of the three major airlines have exceeded 10 billion. When will the aviation industry "turn from winter to spring"

　　Zhongxin Finance, April 1 (Ge Cheng) Recently, the three major domestic airlines have successively disclosed their annual reports.

Data shows that in 2021, Air China, China Eastern Airlines, and China Southern Airlines will all have losses of more than 10 billion yuan.

The total loss of the three airlines reached 40.959 billion yuan, accounting for nearly 50% of the total loss of the civil aviation industry in 2021.

Dalian Airport welcomes the new flight season.

(Data map) Photo courtesy of Dalian Airport

　　The annual report shows that in 2021, Air China's revenue will be 74.532 billion yuan, and the net profit attributable to shareholders of the listed company will be 16.642 billion yuan.

China Southern Airlines achieved an operating income of 101.644 billion yuan and a net profit loss attributable to shareholders of the listed company of 12.103 billion yuan.

China Eastern's revenue was 67.127 billion yuan, and the net profit attributable to shareholders of the listed company was 12.214 billion yuan.

Loss?

What do airline annual reports say?

　　As for the reasons for the loss in performance, the three major airlines invariably pointed to the impact of the epidemic and rising fuel prices in their annual reports.

　　In 2021, the global aviation industry will continue to be impacted by the new crown pneumonia epidemic.

According to data released by the International Air Transport Association (IATA), global air passenger demand (measured in revenue passenger kilometers) in 2021 will drop by 58.4% compared to the whole of 2019.

While an improvement compared to 2020, it is far from pre-pandemic levels.

The impact of international passenger traffic is even heavier. In 2021, international passenger demand will drop by 75.5% compared with 2019. 

　　According to the forecast of the International Air Transport Association, in 2021, the industry-wide loss of the air transport industry is expected to be US$51.8 billion, a year-on-year decrease of US$859 million.

The load factor was 67.2%, down 15.4 percentage points from 2019.

　　In addition to the decline in passenger traffic, the continued increase in fuel costs has also continued to increase the pressure on airlines' profits.

　　The data shows that in 2021, the fuel costs of Air China, China Southern Airlines and China Eastern Airlines will all rise. Compared with the same period last year, the fuel costs of the three airlines will increase by 39.73%, 35.69% and 48.79% respectively.

　　China Eastern's annual report shows that the company's average oil price in 2021 will increase by 34.38% year-on-year compared to 2020.

However, in addition to higher fuel prices, the increase in fuel spending also included an increase in the number of flights.

The three major airlines lose a lot of money, why?

　　According to the "Research Report on the Operation of Profitable Civil Aviation Enterprises in 2021" released by the General Department of the Civil Aviation Administration, in 2021, the loss of my country's civil aviation transportation industry will reach 84.3 billion yuan.

　　The report also pointed out that the civil aviation industry is characterized by heavy assets and high liabilities, and the operating conditions of civil aviation companies often fluctuate greatly with changes in their investment cycles and debt cycles.

Affected by the epidemic, the investment cycle curve and debt cycle curve of civil aviation companies will have a "coherent tremor", which will become a "force majeure" that determines the profit and loss of the company.

　　Air China, China Eastern Airlines, and China Southern Airlines lost 40.959 billion yuan, accounting for about 48.59% of the total loss in the civil aviation industry.

What is the reason for this?

　　In this regard, Zhongxin Finance contacted Li Hanming, an expert from the Civil Aviation Resource Network.

He said that at present, the losses of large airlines are mainly caused by restricted routes.

　　On the one hand, the three major airlines have more wide-body passenger aircraft, but due to insufficient passenger flow on domestic routes, many wide-body passenger aircraft cannot be put into use, and expenses such as rent and depreciation costs have not slowed down.

　　On the other hand, many international routes have not yet resumed, and the utilization rate of wide-body passenger aircraft is less than 30% of the original.

In this regard, he gave an explanation: "Many wide-body passenger aircraft can only fly for two to three hours a day, while the original is about eight hours." This further exacerbated the cost pressure.

　　However, Li Hanming also said that in the state of general losses in the industry, some airlines can also achieve profits, and further gave an example: "Some airlines such as Colorful Guizhou and Jiuyuan Airlines can also maintain profits." He said that these airlines The company's characteristic is that there are many routes within the province, which are relatively stable and the passenger flow performance is much more stable.

New low fares, new high fuel costs... Can the pressure be relieved?

　　In response to the rising fuel costs, some airlines have chosen to increase the fuel surcharge to ease the pressure.

　　On March 31, domestic airlines such as Hainan Airlines, China Eastern Airlines, and Grand China Airlines notified that the fuel surcharges will be adjusted from April 5, 2022 (inclusive).

　　These airlines said that they will increase the fuel surcharges for domestic routes: for segments below 800 kilometers (inclusive), each passenger will be charged RMB 50; for segments above 800 kilometers, each passenger will be charged RMB 100. 150%.

That's more than airfare on some routes.

　　At the same time, as the Qingming holiday is approaching, many airlines have also launched promotional activities.

According to a number of booking platforms, air tickets for the Qingming holiday this year are the lowest price in the past three years.

Among them, there are many 10% off air tickets in some popular routes, and the naked ticket price is about 100 yuan, which is comparable to the price of cabbage.

Some low-cost air tickets are still less than half the price of train tickets, even after adding the fuel cost of the machine.

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