News
China’s “Big Three” record further yield drops
April 29th 2016
The state-controlled “Big Three” Chinese carriers have come under pressure from falling yields amid signs of overcapacity. In 2015, Air China’s yield dropped 6.7%, to 0.56 yuan ($0.09), China Eastern Airlines (CEA) lost 8.4%, also to 0.56 yuan, and China Southern Airlines (CSA) dropped 8.6% to 0.53 yuan. Read More »
Most recently, in March, all three airlines reported significant load factor drops, signalling more damage to yields (RASKs) if the carriers did not manage to proportionately lower costs (CASKs) in the same period. With the crude oil price gradually rising in recent weeks, this outcome is increasingly challenging and could potentially harm their full-year 2016 bottom lines.
CSA’s 2015 net income more than doubled to 3.7 billion yuan ($571.2 million) and CEA’s net profit rose 33%, to 4.5 billion yuan. However, both carriers fell short of the average analyst estimates - 3.9 billion and 5.3 billion yuan, respectively, amid surplus capacity and weak premium demand.
Across the border, Hong Kong’s Cathay Pacific Airways in March announced an 11.4% yield decline in 2015, spurred particularly by reduced business and first class bookings. Singapore Airlines (SIA) recorded a 4.6% yield drop. SIA has been gradually reducing the number of first class seats on several of its long-haul aircraft - down to four suites on several planes.
