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China’s “Big Three” carriers report 2019 results
April 3rd 2020
Air China has warned the coronavirus pandemic that began in Hubei province in late 2019 will lead to losses in the short term. Read More » The airline's outlook for 2020 was included in its full-year results published this week, which showed a double-digit decline in net profit for calendar 2019.
"In early 2020, the outbreak of the novel coronavirus pneumonia pandemic impacted the aviation industry adversely and losses may be incurred inevitably in the short term," Air China said.
"Air passenger travel within Mainland China has decreased during and after Spring Festival. Global travel restrictions also have reduced the demand for international routes."
Figures from Johns Hopkins University in the U.S. showed there were 82,433 confirmed cases of coronavirus in China. Of those, 3,322 people have died from the respiratory disease, also known as COVID-19. Globally, more than one million people have tested positive, with 52,973 deaths recorded.
Recent indications suggested China had brought the spread of the disease under some control, with restriction of movement rules eased in some provinces.
Recently, the country introduced limits on the number of international flights in an effort to prevent people bringing the coronavirus into China and creating a second wave of infections.
Air China said it had "spared no effort in prevention and control of the pandemic in a bid to maximize the protection of health and safety of its passengers and employees".
"The Group also strived to minimize the impact of the pandemic by adjusting its capacity structure, optimizing yield management, strengthening cost control and placing more emphasis on risk management and control," Air China said.
"We believe that, under the leadership of the Central Committee of the Party and with the nationwide endeavours of the public on a united front, we will surely be able to triumph over this battle of containing the pandemic."
Another of the “Big Three” Chinese airline groups, China Eastern Airlines (CEA) posted an improvement in net profit in 2019 amid what it described as a slowing global economy and a significant increase in "various unstable uncertainties affecting economic development".
CEA said the global aviation industry was facing "tremendous challenges". "The travel restriction measures implemented by many countries have greatly reduced the travel demands and willingness of passengers," CEA said in a regulatory filing on April 1.
"The capacity of global airlines significantly decreased and some airlines have struggled to survive.
"As at the date of this announcement, the duration of COVID-19 all over the world remains uncertain, which may increase and extend the impact on the recovery of travel demand. COVID-19 may catalyse new changes in the scale of the global air transport industry.
"The general impact on the operation and financial condition of the Group for the year cannot be precisely predicted currently," CEA said.
The third member of the Mainland airline triumvirate, China Southern Airlines (CSA), said net profit fell 10.3% in its full year to December 31, 2019 as a result of "frequent international trade frictions, intensified global financial volatility, geopolitical risks and other factors".
CSA’s outlook for 2020 was similarly downbeat as it estimated the outbreak would have an "adverse impact on the group’s business operation and operating revenue".
"The COVID-19 outbreak since early 2020 has brought about uncertainties in the group’s operating environment and has impacted the group’s operations and financial position," CSA said in a regulatory filing on March 30.
"The Group’s revenue tonne kilometers for the first two months of 2020 have decreased by 37% compared with the same period in 2019."
CSA said it had taken contingency measures that included temporary capacity reductions, route suspensions and a review of the company's cash flow forecast for the next 18 months.
"Based on such forecasts, the directors of the company believe adequate funding will be available for the working capital and capital expenditure requirements of the group during that period," it said.
"Up to the issuance date of these annual results, the outbreak has not ended and the Group cannot reasonably estimate its impact on the business operation and financial performance.”
MAINLAND AIRLINE RESULTS
Air China
Air China’s net profit for the 12 months to December 31, 2019 fell 13.5% to RMB6.4 billion (US$903.52 million) from RMB7.4 billion in the prior corresponding period. Revenue was down 0.4%, at RMB136.2 billion, Air China said.
The airline carried 115 million passengers for the reported year, a 4.8% improvement over the same months in 2018. Yield slipped 2.2%.
During 2019, Air China’s fleet grew to 699 aircraft. Forty eight new airframes joined the carrier, including four A350s and 30 A320neos. Eighteen older aircraft were retired. The Beijing-based carrier planned to take delivery of 37 aircraft and phase out four aircraft in 2020. The company declared a final dividend of RMB0.4442 per 10 ordinary shares.
China Eastern Airlines
China Eastern Airlines (CEA) said net profit for the 12 months to December 31, 2019 rose 18.5%, to RMB3.2 billion (US$451.75 million), from RMB2.7 billion in the prior corresponding period. Revenue was up 5%, at RMB121 billion.
The Shanghai-headquartered airline carried 130 million passengers for the 2019 year, a 7.5% improvement from the prior year. Yield was down 3.3%.
During 2019, CEA expanded its fleet by 43 to 734 aircraft, including the introduction of 44 new airframes. One aircraft was retired. It said it planned to take delivery of 46 aircraft and phase out one aircraft in 2020. The company declared a final dividend of RMB0.050 per ordinary share.
China Southern Airlines
China Southern Airlines (CSA) said net profit for the 12 months to December 31, 2019 declined by 10.3%, to RMB2.6 billion (US$141.114 million), from RMB2.9 billion in the prior corresponding period.
Revenue was up 7.5% at RMB154 billion, the airline said.
One hundred and fifty one million passengers were carried for the reported year, an 8.4% improvement from the prior year. Yields were flat. No fleet information was included in the annual results and no dividend was declared.
