China Eastern, the third largest carrier in China has reported a reduction in loss from $1.3bn to $549bn in Q1 of 2023. China Southern’ airlines’ loss narrowed to $274.9 million from CNY4.496 billion in Q1 of 2022 while Air China cut its Q1 loss from CN 10.5 billion to CN 2.9 billion. All the three big airlines increased capacity and schedules significantly, with both domestic and international services in March 2023.
Analysts at the investment bank China International Capital Corporation (CICC) have said that international travel will recover at a pace that might be faster than market expectations in Q2 of 2023. CICC predicts that domestic and international flights will reach 60% of pre-pandemic levels during the summer. Routes within mainland China are considered to be domestic while routes to Hong Kong and Macau are international flights.
China's civil aviation authority Civil Aviation Administration of China (CAAC) set a target for domestic and international travel to return to around 75% of 2019 levels by the end of the year. CAAC additionally expects passenger trips to improve from 252 million in 2022 to 460 million by the end of 2023.
Stronger corporate earnings in the first quarter are only one signal that China's aviation industry is rebounding. Chinese airlines are seeing significant increases in applications for cabin crew jobs as students graduate from universities.
Going ahead, HSBC maintains a positive forecast for the three Chinese airlines. "We continue to expect load factors and yields to improve on domestic routes on the continued pent-up demand and the tightening of capacity due to redeployment of aircraft to international routes," HSBC said in its report. "This could swing the Big 3 airlines into profitability as early as 2Q23 and see them remain profitable overall for FY23e. Our combined 2023e profit forecast of RMB13.4bn for the Big 3 is 4.7x above consensus," the report added.