Chinese carrier Q2 losses expected to narrow amid domestic recovery: HSBC

China’s three largest carriers — Air China, China Eastern Airlines and China Southern Airlines — are expected to see losses narrow in the second quarter helped by strong domestic traffic recovery and a flat Chinese Yuan against the US dollar. An HSBC Global Research report into the Chinese airline industry adds that the carriers’ losses could continue to narrow into Q3, even leading to a likely breakeven for the quarter ending 30 September. It comes after the ‘Big Three’ posted heavy losses in the first quarter, as China was the first country hit by the coronavirus pandemic - racking up collective operating losses of over CNY20b ($2.9b) between them for the three months ending 30 March 2020. The carriers have yet to release their financial results for the six months ended 30 June. They have, however, previously warned of substantial losses for the period, amid a collapse in travel demand due to global travel restrictions imposed to curb the pandemic. Traffic levels among the carriers though have been improving month-on-month. The report estimates the three carriers’ combined losses will be about 21% lower quarter on quarter, with China Southern and China Eastern expected to perform better than Air China in their respective quarterly financial results. This is because of Air China’s “exposure to the highly competitive Beijing market and [its] stake in loss-making Cathay Pacific”, the researchers add. <br/>