Source of this article: Times Finance Author: He Mingliang
Image source: Picture Worm Creative
Spring Airlines (601021. SH) is still king!
As of April 30, the 2023 annual report and the first quarter report of 2024 of the seven major A-share listed airlines have been disclosed, and in terms of the amount of net profit attributable to the parent company, Spring Airlines, a private low-cost airline, ranked first among the seven major airlines in both reporting periods.
Especially in 2023, unlike the three major state-owned airlines, which are still struggling with profit and loss, Spring Airlines, which operates more flexibly, achieved a record high in revenue and net profit attributable to the parent company since its inception.
However, in the latest 2024 first quarter report, China Southern Airlines (600029. SH), HNA Holdings (600221. SH) and other profit levels have quickly caught up, and are repairing lost ground with advantages such as fleet size.
Last year, three private airlines were profitable
On the evening of April 29, with the announcement of Spring Airlines' 2023 annual report, the seven major A-share listed airlines have all disclosed their 2023 report cards.
Spring Airlines, a low-cost airline, still maintained the strength shown in the third quarter of last year, and its net profit attributable to the parent company in 2023 ranked first among the seven major airlines, ranking first with 2.257 billion yuan. For the whole year of 2023, the airlines that will achieve profitability are all private airlines, Juneyao Airlines (603885. SH) and HNA Holdings made profits of 751 million yuan and 311 million yuan respectively.
Loss-making airlines include the three major state-owned airlines and the franchised regional China Express Airlines (002928. SZ), of which China Express Airlines lost 965 million yuan, Air China (601111.SH), China Southern Airlines, China Eastern Airlines (600115. SH) lost 1.046 billion yuan, 4.209 billion yuan and 8.168 billion yuan respectively.
In terms of revenue scale, China Southern Airlines, Air China, China Eastern Airlines and Hainan Airlines, which have larger fleets, recorded 159.929 billion yuan, 141.100 billion yuan, 113.741 billion yuan and 58.641 billion yuan respectively, while Juneyao Airlines, Spring Airlines and China Express Airlines, which have smaller fleets, recorded 20.096 billion yuan, 17.938 billion yuan and 5.151 billion yuan respectively.
In terms of load factor indicators that test operational efficiency, Spring Airlines leads its peers with 89.39%, Hainan Airlines and Juneyao Airlines have 81.42% and 82.81% respectively, and the four loss-making airlines have less than 80% load factor, Air China, China Eastern Airlines, China Southern Airlines and China Express Airlines have 73.22%, 74.42%, 78.09% and 75.36% respectively.
As we enter the end of the earnings season, Air China, China Southern Airlines, Hainan Airlines, etc. have announced new aircraft introduction plans.
On April 26, Air China announced the purchase of 100 C919 aircraft (extended-range) from COMAC for a total base price of about US$10.8 billion, and on April 29, China Southern Airlines also announced the purchase of 100 C919 aircraft from COMAC for a total purchase price of about US$9.9 billion. According to Times Finance, the unit price of China Southern Airlines and Air China is different, or it may be related to the range extension C919 purchased by Air China.
In September last year, China Eastern Airlines also announced that it had signed a purchase agreement with COMAC to order 100 C919 large passenger aircraft on the basis of the first batch of five aircraft purchased in 2021. So far, the three major state-owned airlines have all announced the purchase of C919 orders, and the order delivery dates of the above three airlines are relatively consistent, and they will all be delivered in batches between 2024 and 2031.
Hainan Airlines announced that it will introduce 28 narrow-body aircraft with higher fuel efficiency and stronger profitability in the form of operating leases, including 25 737 series aircraft and 3 A320/A321 series aircraft, with a delivery time of 2024~2026.
In the first quarter of this year, Air China and China Eastern Airlines lost more than 2.4 billion yuan
All the past is prologue. Although the profit pattern of the seven listed airlines in 2023 is fixed at "four losses and three profits", in the first quarter of this year, the industry's profit pattern has also begun to reconstruct.
Judging from the first quarter reports of each airline in 2024, the largest increase in revenue is Air China, with a year-on-year increase of 59.83% to 40.066 billion yuan, followed by China Express Airlines, with a year-on-year increase of 54.67% to 1.616 billion yuan, and China Eastern Airlines ranked third, with a year-on-year increase of 48.96% to 33.189 billion yuan.
In the first three months of 2024, Hainan Airlines' revenue increased by 33.48% year-on-year to 17.550 billion yuan, Spring Airlines increased by 33.79% year-on-year to 5.168 billion yuan, and China Southern Airlines increased by 30.97% year-on-year to 44.601 billion yuan. Juneyao Airlines' revenue growth was the last, with revenue in the first quarter increasing by 28.77% year-on-year to 5.719 billion yuan.
In terms of net profit attributable to the parent company, Spring Airlines continued its strong performance in 2023 and led the listed airlines with a net profit attributable to the parent of 810 million yuan, but China Southern Airlines and Hainan Airlines have been catching up quickly, with a net profit of 756 million yuan and 687 million yuan respectively, while Juneyao Airlines and China Express Airlines recorded a net profit of 371 million yuan and 24.6685 million yuan respectively in the same period.
It is worth noting that due to the liquidity crisis in 2019 and the transfer of Tianjin Airlines to HNA Group by HNA Holdings, although the fleet size and passenger capacity in the first quarter of this year are still lower than those in the same period in 2019, HNA Holdings has achieved profitability and ranks in the first echelon of profitability of listed airlines.
However, in the first quarter, two airlines still recorded losses, Air China and China Eastern Airlines lost 1.674 billion yuan and 803 million yuan respectively, with a total loss of more than 2.4 billion yuan.
In the first quarterly report, the listed airlines described the performance relatively simply, all of which said that the aviation market was recovering opportunities, with increased capacity, increased business volume, and improved operating performance.
It is worth noting that, except for Spring Airlines, the net profit attributable to the parent company of the other six listed airlines in the first quarter did not exceed the same period in 2019.
For the three major state-owned airlines and Hainan Airlines, which have larger fleets, the recovery of international routes still has an impact on their profitability – a significant number of wide-body aircraft are unable to perform at full capacity on long-haul routes.
According to the data of Flight Steward, the recovery rate of international flights of domestic airlines in the first quarter of 2024 will reach 77.9% as a whole, and the recovery rate of international flights of the three major airlines will be between 70%~80%, which is still not fully recovered. It should be pointed out that among the resumed international flights, if the load factor situation is not satisfactory, it will also lead to the poor profitability of the specific flight.
Image source: Flight Steward
In addition, in the first quarter of this year, the busier and more profitable business routes in China (the flight routes of Beijing, Shanghai, Guangzhou, Shenzhen airports) are also facing a situation where the supply of capacity exceeds the demand, with the number of flights increasing by 26.9% year-on-year in 2019, but the lack of passenger load factor is slightly lower than that of the same period in 2019, which will also affect the profitability of airlines that master these popular times and routes.
Image source: Flight Steward