HSBC raises Chinese ‘Big Three’ loss forecast

HSBC has widened its loss estimates for China’s three largest state-owned carriers, while forecasting a full domestic travel recovery by 2023. The ‘Big Three’ — comprising Air China, China Eastern Airlines and China Southern Airlines — are now forecast to report a cumulative full-year loss of CNY24b ($3.7b) for 2021. This compares to HSBC’s earlier forecast of CNY12b. “This reflects our cautious view on a recovery in international travel, lower domestic pax and yield, and cost pressures partially offset by strong cargo,” HSBC states. The HSBC Global Research report, dated 12 August, comes as China battles a resurgence in coronavirus infections from the more contagious Delta variant. The bank notes that the latest wave — the fifth major infection wave in the Chinese mainland — “has disrupted the domestic summer peak season travel”, and affected domestic recovery momentum. Still, HSBC believes that the Chinese authorities will move in to swiftly contain the latest outbreak — as they have on previous occasions — and this will allow a “sharp recovery” on the domestic front. “Increased vaccination rates will also likely render any future outbreaks less painful than the past,” they add. <br/>