China's top airline returns to profit as domestic routes bloom

China Southern returned to profit in Q3, the largest mainland carrier said Friday evening. While major aviation players globally suffer from a sharp drop in air travel demand as the coronavirus pandemic prompts border restrictions, Chinese carriers are moving toward a recovery led by the country's vast domestic market. The Guangzhou-based airline recorded a net profit of Y711m ($106m) for the July-September period, the company's filing shows, down 70% on the year. Revenue dropped by 40% to Y26.38b, but cost savings that include lower fuel consumption and cheaper oil prices helped lift the bottom line. A stronger yuan against the greenback eased the burden as big-ticket expenses like aircraft and fuel are denominated in US dollars. Heavy losses in H1 2020 left China Southern with a net loss of Y7.46b for the first nine months, despite the airline's Q3 profit. The other two major state-owned carriers, Air China and China Eastern Airlines, were unable to reach a profit in Q3. Overall domestic traffic in the mainland was only 2% lower on the year in September. Stanley Hui Hon-chung, an industry veteran in Hong Kong, said recently that the recovery of passenger traffic in China was "amazing" and that domestic demand is virtually restored.<br/>