Reporter Wu Jing and Lu Zhikun report from Beijing
Since last year, driven by the recovery of cultural tourism and the popularity of summer transportation, the performance of major listed airlines has recovered significantly.
Compared with the three major aviation central enterprises that are still reducing losses, HNA Holdings (600221. SH) has taken the lead in turning losses into profits last year.
According to the recently released financial report, in 2023, HNA Holdings will achieve revenue of 58.641 billion yuan, an increase of 156.48% year-on-year, and a net profit attributable to shareholders of listed companies of 311 million yuan, compared with -20.247 billion yuan in the same period of the previous year, turning losses into profits.
It is understood that after the previous bankruptcy reorganization, the new Hainan Airlines ushered in a "new life" after the Fangda Group became the owner, and last year HNA Aviation achieved its first operating profit in the past five years.
The performance turned losses into profits
HNA Holdings said that the company's turnaround last year was mainly due to the overall recovery of the civil aviation industry.
It is understood that the airlines under HNA Holdings include Hainan Airlines, Xinhua Airlines, Changan Airlines, Shanxi Airlines, Yunnan Lucky Airlines, Fuzhou Airlines, Urumqi Airlines and Guangxi Beibu Gulf Airlines. HNA Holdings said that last year, the company actively seized market opportunities, expanded capacity, optimized route layout, and launched differentiated aviation products such as "boutique express lines".
The rapid recovery of international routes may be an important factor in the turnaround of its performance. Last year, HNA Holdings carried 1.27 million passengers through international routes, a year-on-year increase of nearly 13 times.
In 2023, HNA Holdings restarted key routes such as Haikou to Melbourne, Haikou to Sydney, Beijing to Boston, and Chongqing to Paris, and further accelerated the resumption of international flights by the end of 2023, opening routes from Haikou to Auckland, resuming important routes from Hangzhou to Sapporo and Beijing to Phuket, and resuming more than 100 new international and regional routes throughout the year.
However, compared with 2019, there is still a gap in the degree of recovery of HNA Holdings last year, both in terms of capacity delivery and demand. According to the financial report, last year, the company's ASK (available seat kilometers) reached 125,547.71 million person-kilometers, a year-on-year increase of 153.53%, and recovered to 72% in 2019; PRK (revenue passenger kilometres) reached 102,222.74 million passenger kilometers, a year-on-year increase of 205.01%, and only recovered to 70.32% of 2019.
It is understood that last year, China's civil aviation industry entered a year of recovery and development, during the year, the industry completed a total of 118.83 billion ton-kilometers of transportation and 620 million passenger traffic, an increase of 98.3% and 146.1% year-on-year, respectively, to 91.9% and 93.9% in 2019.
Among them, international passenger flights have recovered from less than 500 flights per week at the beginning of the year to more than 4,600 flights at present, an increase of 9.6 times, and the number of countries resuming flights has reached 89.2% of the pre-epidemic level. China-Europe passenger traffic has recovered to more than 60% of pre-pandemic levels, and regular direct flights between China and the United States have increased to 63 flights per week.
However, the slower than expected recovery of international flights, the oversupply of domestic flights, and the rise in oil prices are still important factors that plague the profitability of listed airlines, and have also become the starting point for the performance of major airlines this year.
According to the disclosure of HNA Holdings, in the first quarter of this year, the company's domestic passenger traffic has recovered to 80% of the same period in 2019 to 16.1204 million passengers, regional routes have recovered 46.30% to 39,800 passengers, and international routes have the lowest recovery rate of 40.48%, with 518,500 passengers.
It is understood that in the summer and autumn season of this year, Hainan Airlines has further optimized its international route network, with routes reaching major cities in Europe, North America, Asia and Oceania. In May and June, five new international routes will be added, namely the Chongqing-Seattle route on May 16, the Beijing-Edinburgh route on May 17, the Shenzhen-Vienna route on May 29, the Shanghai Pudong-Brussels route on June 18, and the Beijing-Prague route on June 24.
HNA Holdings mentioned in the financial report that with the construction of the Hainan Free Trade Port in the future, the company will take advantage of the relevant policies of the fifth and seventh navigation rights of the Hainan Free Trade Port to actively explore the international routes of the free trade port.
For the expansion plan of international routes this year, HNA Holdings also said in the financial report that it will increase the expansion of short-haul routes in neighboring countries such as Japan, South Korea and Southeast Asia, improve the construction of Hainan's regional gateway network, accelerate the resumption of regular international passenger routes, especially those involving the "Belt and Road" and RCEP countries, and accelerate the resumption of routes in North America.
It is understood that since last year, China has successively introduced measures including transit visa-free, unilateral and two-way visa-free, etc., to continue to promote the growth of the international air passenger market.
According to the forecast of the Civil Aviation Administration, it is expected that in 2024, the whole industry will complete 136 billion ton-kilometers of total transportation turnover, passenger traffic and cargo and mail transportation, 690 million passengers and 7.6 million tons, an increase of about 14.4%, 11.3% and 3.3% year-on-year respectively. Among them, the recovery of the international passenger market will be accelerated, and it is expected to reach about 6,000 flights per week by the end of 2024, recovering to 80% of 2019.
New Hainan Airlines Enters the "Year of Great Development"
It is understood that the process of turning losses into profits by HNA Holdings is very tortuous. As early as 2017, three listed companies of the HNA system had a debt crisis of 100 billion yuan, which led to the bankruptcy and reorganization of HNA Group.
During this period, the outbreak of the new crown epidemic has hit the aviation industry, especially civil aviation enterprises, hard, and the aviation sector of HNA Group has not been spared.
According to previous media reports, after many promotions, at the end of 2021, Liaoning Fangda Group increased its capital by 38 billion yuan (plus 3 billion yuan of risk relief funds) and officially entered the main aviation business of HNA Group on December 8 of that year. At that time, Fangda Aviation (in June 2021, Fangda Group Industry, as the lead entity, jointly established Hainan Aviation Development Co., Ltd. with its affiliated enterprises, and participated in the reorganization investment of HNA Aviation's main business as the main investment entity) held 95% of the equity of HNA Aviation Group (hereinafter referred to as "HNA Aviation"), and indirectly held 4.095 billion shares of "ST Hainan Airlines" through Grand China Airlines controlled by HNA Aviation and American Aviation LDC., a subsidiary of Great China Airlines. The actual controller of ST HNA became Fang Wei, chairman of the board of directors of Liaoning Fangda Group.
Half a year after the introduction of Fangda Group, HNA Holdings achieved "star picking" on May 18, 2022, and in September of that year, "ST HNA" officially took off its hat and changed its name to "HNA Holdings".
In the face of New Hainan Airlines, Fang Wei proposed to change the development idea of only pursuing revenue scale in the past, and he put forward the development goal of "safety first, service first, and profit first" for New Hainan Airlines.
However, in the first fiscal year of Fangda Group's ownership, the impact of the new crown epidemic intensified, and like the major airlines that year, the operating indicators of HNA Holdings fell sharply, with the company's revenue of 22.864 billion yuan, a sharp decrease of 32.76% year-on-year, and the net profit attributable to the parent company was a loss of 20.247 billion yuan, a year-on-year profit turned into a loss.
According to Fang Wei's plan, 2022 is the "year of rectification", 2023 is the "year of consolidation", and 2024 is the "year of great development". According to the official WeChat account of HNA Aviation in January, in terms of safety control, in the two years from 2022 to 2023, HNA Aviation has increased its investment in key safety operation support resources such as aviation materials and engines to ensure continuous and stable safe operation, with a cumulative investment of nearly 19.5 billion yuan in aviation materials and maintenance.
In terms of service improvement, since June last year, New Hainan Airlines has refined its service classification based on the actual needs of passengers, and has transformed its airlines to full service in accordance with the principle of "everything you need" for basic services, "perfect for extended services", and "supply when appropriate" for value-added services.
In terms of operating efficiency, HNA Aviation implements refined cost control internally, accurately seizes opportunities externally, and broadens its revenue margin. It is understood that Fang Wei brought the management model accumulated in the steel industry into HNA Aviation, and stimulated the subjective initiative of front-line cadres with the incentive policy of "doing to give".
By actively innovating products, increasing marketing efforts, expanding ancillary revenue, and strictly controlling internal costs, HNA Aviation Group's performance in 2023 will achieve revenue of 122.6 billion yuan, an increase of 110% over the same period in 2022, achieving the first operating profit in the past five years, and achieving remarkable management results.
"In 2023, all sectors of Fangda Group will be profitable, and the aviation sector as a whole will be marginal, and it will not be easy to make operational profits due to factors such as the increasing downward pressure on the world economy and international exchange rate fluctuations. At the HNA Aviation Special Conference in January, Fang Wei said.
In the first quarter, the company achieved revenue of 17.55 billion yuan, a year-on-year increase of 33.48%, and a net profit of 687 million yuan, a year-on-year increase of 334.51%.
It is worth noting that in order to improve the level of capacity, Fangda Group has increased the scale of aircraft purchases, and Fang Wei proposed at the HNA Aviation Group cadre meeting in the middle of last year that the new HNA fleet size should reach about 1,000 aircraft in 2029 and 1,200-1,300 aircraft in 2035.
On the night of the release of the annual report and the first quarterly report, HNA Holdings also announced that it will continue to introduce narrow-body aircraft with higher fuel efficiency, more advanced technology and stronger profitability to further expand the size of its fleet, and the company plans to introduce 25 new 737 series aircraft and 3 A320/A321 series aircraft from 2024 to 2026.
(Editor: Lu Zhikun Review: Tong Haihua Proofreader: Yan Jingning)