Strategy Note /

China's airlines ready for post-Covid recovery after CNY 37bn net loss in 2020

  • China Southern Airlines, China Eastern Airlines and Air China reported a combined loss of CNY 37.1 billion

  • Of the three, China Southern Airlines suffered the least adverse impact from the coronavirus pandemic last year

  • Orienting in different directions, the three companies are all demonstrating ongoing recovery

3 May 2021
Published byEqualOcean

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The trio's businesses are recovering as the massive vaccine rollout is boosting the industry.

China Southern Airlines

But compared with other countries and regions globally, China's aviation industry seems to be recovering somewhat faster. So far, more than 40 airlines worldwide have gone bankrupt or been restructured since the epidemic started in early 2020. According to the International Air Transport Association (IATA), from the perspective of market segments, the global average revenue passenger kilometers (RPK) of the main geographic areas all dropped more than 60%. The passenger load factor (PLF) in Africa, North America and the Middle East was less than 60% while the passenger-carrying rate in the Asia Pacific and Europe was about 65%.

China's trio of airlines had superior critical ratios, compared to the global averages in 2020.


Last year, China accounted for 19.9% of the global domestic passenger transport market, ranking first, followed by the United States (16.6%). The two countries' leading positions result from the enormous demand for domestic transportation. China's effective COVID-19 control has played a great role in the recovery. From this point of view, China's airlines seem to have an increasing investment value. This article will discuss the present and future outlook of China's three major airlines.

Financial highlights 

Among the three, China Southern Airlines achieved the largest revenue in 2020, while China Eastern Airlines experienced the most severe revenue decline. In detail, the former generated CNY 92.6 billion, down 40% year-on-year, Air China's figure hit CNY 69.5 billion, down 49% year-on-year, and China Eastern Airlines reached revenue of only CNY 58.6 billion, down 51.5% year-on-year. Due to the large losses, the freight business has become crucial. Specifically, the cargo business addedCNY 16.5 billion, CNY 8.6 billion and CNY 4.9 billion (up 71.5%, 49.21%, 27.94% year-over-year) to revenues of China Southern Airlines, Air China and China Eastern Airlines respectively. By contrast, the passenger revenue of the three companies has been seriously affected. The revenue contributed by passenger businesses declined 49.07%, 55.46%, and 55.25% for China Southern Airlines, China Eastern Airlines and Air China, respectively.


Air China saw the largest loss in terms of net profit, while China Southern had the largest decline. Specifically, China Southern Airlines, China Eastern Airlines and Air China experienced net losses of CNY 14.4 billion, CNY 11.8 billion and CNY 10.8 billion, plumping 324.8%, 470.4% and 509%, respectively.

The net cash flow from China Southern Airlines' operating activities decreased by 76.26% year-on-year, while that of China Eastern Airline and Air China decreased 95.8% and 96.3% compared with 2019. Just from the finance perspective, the recovery...

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