Source of this article: Times Finance Author: He Mingliang
Image source: Tuworm Creative
Seven major airlines announced the report card of the first half of the year.
As of the evening of August 30, the first half results of the seven A-share listed airlines have been disclosed.
In line with previous forecasts, Spring Airlines (601021. SH), Juneyao Airlines (603885. SH) two are profitable, and the remaining five Air China (601111. SH), China Eastern (600115. SH), China Southern Airlines (600029. SH), HNA Holdings (600221. SH), China Airlines (002928. SZ) all lost money.
When summing up their results, major airlines mentioned that the losses were affected by factors such as the recovery of international routes less than expected, the RMB exchange rate and other factors, but China Southern Airlines did not explain the reasons for the loss in its financial report.
Only two are profitable
2023 is a year for Chinese airlines to recover from the impact of the epidemic, and two of the seven A-share listed airlines have turned a profit in the first half of the year.
Spring Airlines reported that the company achieved revenue of 8.030 billion yuan in the first half of this year, a year-on-year increase of 119.79%; Net profit was 838 million yuan, compared with a loss of 1.245 billion yuan in the same period last year. Spring Airlines said that with its flexible operation strategy, the total transportation turnover and passenger turnover in the first half of the year have recovered to 102.3% and 101.7% of the same period in 2019.
In the second quarter of this year, Spring Airlines took the lead in resuming Southeast Asian routes, mainly Thailand, and the available seat kilometers on international routes have recovered to nearly 50% of the same period in 2019. However, the company also pointed out that there are still problems on international routes, such as the lag in the recovery of the overseas tourism market, the long period of flight operation organization, the insufficient support capacity of some foreign airports, and geopolitics.
Another company that achieved profitability was Juneyao Airlines, which recorded revenue of 9.331 billion yuan in the first half of the year, a year-on-year increase of 173.58%; The net profit was 62.41 million yuan, compared with a loss of 1.879 billion yuan in the same period last year.
Juneyao Airlines said that benefiting from the recovery of the industry and the increase in passenger travel demand, its total transport turnover and passenger traffic have recovered to 109.19% and 109.5% of the same period in 2019, and the international flight volume has recovered to 51.68% of the same period in 2019.
But Juneyao Airlines cited pressure on the cost side. It noted that crude oil prices fluctuated between $70/b and $90/b in the first half of the year, while the renminbi has depreciated all the way since April, falling to 7.2258 against the dollar by the end of the reporting period. "Rising crude oil prices and the depreciation of the renminbi have exacerbated production costs for airlines." Juneyao Airlines said.
China Airlines, which focuses on regional airlines, still lost money in the first half of the year despite a year-on-year increase of 77.05% year-on-year to 2.215 billion yuan, with a net profit of -752 million, a year-on-year loss of only 200 million.
China Airlines explained that the company's fleet size reached 67 aircraft (as of the end of June this year), which was an increase in the number of aircraft in the same period (last year), so aircraft leasing and depreciation costs increased; Secondly, the exchange rate fluctuations increased in the second quarter, resulting in large exchange losses for the company.
The four major airlines with large fleets also recorded losses in the first half of the year, with the exception of China Southern Airlines, the remaining three losing more than 10% of their net assets at the end of last year.
In the first half of 2023, Air China, China Eastern Airlines, China Southern Airlines and HNA Holdings recorded revenue of RMB59.613 billion, RMB49.425 billion, RMB71.83 billion and RMB27.636 billion, respectively, an increase of 148.88%, 155.37%, 75.98% and 149.51% year-on-year. The net loss for the same period was $3,451 million, $6,249 million, $2,875 million and $1,609 million respectively.
In terms of passenger traffic, the four major airlines recovered to about 98%, 81%, 89% and 67% of the same period in 2019 in the first half of the year, respectively.
The four major airlines have slightly different explanations for losses.
Air China and China Eastern both said that they were affected by the weaker-than-expected recovery of international routes and the fluctuation of the RMB exchange rate against the US dollar. HNA said that mainly affected by exchange rate fluctuations, the company's financial exchange loss was as high as 2.625 billion yuan. However, China Southern Airlines is the only listed airline among the seven airlines that does not directly explain its profit loss.
It is worth noting that among the subsidiaries of China Southern Airlines, Xiamen Airlines achieved a profit of 236 million yuan in the first half of the year, compared with a net loss of 1.653 billion yuan in the same period last year, while China Southern Airlines Logistics, which is in the process of preparing for spin-off and listing, achieved a profit of 1.258 billion yuan, compared with 2.644 billion yuan in the same period last year.
Compared with Spring Airlines and Juneyao Airlines, the four major airlines have larger fleets, more wide-body aircraft, and cover more international routes. Therefore, in the context of the failure of international routes to recover as scheduled, it is more difficult for the four major airlines to reverse their losses.
The China Aviation Association said at the second-quarter board meeting that the domestic international passenger traffic in the second quarter was 6.126 million, only recovering to 33.7% of the same period in 2019. International routes, especially intercontinental routes, have recovered slowly due to various factors, resulting in oversupply of capacity in the domestic market to a certain extent.
The fuel surcharge has been raised again
At the same time that the seven airlines announced their interim reports, the fuel surcharge was raised again.
On August 30, Tongcheng Travel provided information to Times Finance and Economics that it received news from airlines that from September 5 (the date of ticket issuance), the fuel surcharge for each adult passenger on routes below 800 kilometers (inclusive) is 60 yuan, and the fuel surcharge for flights over 800 kilometers is 110 yuan, which is 40 yuan and 80 yuan respectively higher than the low level in June.
This is the second increase in the fuel surcharge this year, the last time on August 5 (60 yuan for more than 800 kilometers and 30 yuan for more than 800 kilometers).
Wind data shows that MICEX Brent crude oil futures once rose to around $87 / barrel in April this year, and then turned downward, both below $80 in April ~ June, but once rushed to around $87 since July, and remained above $80 in August.
Source: Wind
The recovery of international oil prices has led to an increase in domestic jet fuel procurement costs, so airlines have raised fuel surcharges to make up for cost losses.
The person in charge of Tongcheng Travel said that since the beginning of this year, the tourism market has been in a situation of both supply and demand. Next, during the Mid-Autumn Festival National Day holiday, the flow of family visits and tourist tourists is highly superimposed, and the overall price level of domestic air tickets is expected to exceed that of the summer. "As the summer vacation draws to a close and the school season arrives, ticket prices have fluctuated slightly recently, but the increase in air ticket fuel costs will still push up travel costs, and it is recommended that users who are willing to travel in the near future can plan and consult in advance to book."
On July 11, the 2023 National Civil Aviation Mid-Year Work Video and Telephone Conference was held in Beijing, and Song Zhiyong, director of the Civil Aviation Administration, revealed at the meeting that in the first half of the year, the total transportation turnover of the industry was 53.13 billion tonne-kilometers and the passenger transportation volume was 284 million, which was 84.6% and 88.2% of the same period in 2019, and the industry's transportation production basically recovered to the pre-epidemic level, and the recovery and development of civil aviation in the second half of the year entered a critical period of incremental quality improvement.