Chinese airline losses pared by accounting maneuver

China's biggest airlines, like their peers elsewhere, posted substantial losses for H1 2020 -- but their figures would have been even worse without a timely accounting change. The combined revenue of China Southern, China Eastern and Air China, the country's state-owned "big 3" groups, fell 52.4% to 93.76b yuan ($13.65b) in the six months ended June 30. Their combined net loss reached 26.16b yuan, compared with a profit of 6.76b yuan a year earlier. The results, disclosed on Friday, disappointed some analysts. Andrew Lee of investment bank Jefferies said on Monday that the aggregate net losses "were larger than expected." He said the half-year figures amounted to around 80% to 90% of the full-year loss estimates made by him and many other analysts. The accounting changes by China Southern and Air China, however, eased the flow of red ink. Both changed how they recorded depreciation costs from overhauling aircraft engine components to tie charges to actual flying hours rather than spreading the costs out evenly as an annual charge. A China Southern executive said the airline's accounting change "can more accurately reflect the actual consumption of overhaul components of engine[s] and more objectively reflect the financial position and operating results." "This is an aberration from the industry standard," said David Yu, a finance professor at New York University Shanghai who focuses on aviation. That said, he supported the airlines' move as "we are in a different time" and the change "aligns better with reality." Air China said that several unnamed domestic banks granted a loan quota of up to 158.64b yuan during the period and that 30.16b yuan had been utilized so far. "The remaining amount is sufficient to meet our demands on working capital and future capital commitments," Zhou Feng and Huen Ho Yin, the company's joint secretaries, said in the group's results statement.<br/>