Air China, China Southern narrow quarterly losses as travel rebounds

Air China and China Southern Friday narrowed losses in Q2 after a hit from low Lunar New Year traffic, but domestic COVID-19 outbreaks and border closures are set to weigh on the rest of the year. Chinese airline stocks had tumbled following domestic COVID-19 outbreaks in late July that locked down some cities and closed airports, but rebounded recently as China has nearly halted local spread. On Thursday, the city of Nanjing, locked down since late July, resumed commercial flights. Zhangjiajie, a popular tourist destination, will also reopen its airport on Aug. 30, an airport official said. Q3 results will take a hit from the flight cuts, though they were less severe than in Q1 when outbreaks restricted travel during the normally peak Lunar New Year holiday. Air China said its net loss attributable to shareholders narrowed to 578m yuan ($89.27m) from 6.2b yuan in Q1, taking H1 net loss to 6.8b yuan. China Southern trimmed its loss to 682m yuan from 4.0b yuan in Q1 for H1 total shortfall of a 4.7b yuan. Second-half earnings are expected to receive a boost from the pent-up domestic travel demand during the Mid-Autumn Festival and the week-long National Holiday in the fourth quarter, as health experts expect current outbreaks in China to be contained by end-August. Unlike in most markets, China's domestic capacity has rebounded past pre-COVID levels and airlines have added widebody planes on some local flights because international borders remain closed.<br/>