Chinese airlines left at the gate as international travel takes off
Chinese carriers are chasing the vapour trails of the rest of the airline industry as international travel picks up again with the easing of Covid-19 restrictions. The number of passengers taking foreign trips with the country’s three main airlines last month was 10 per cent of pre-pandemic levels four years earlier, according to aviation consultancy Cirium. Despite Beijing abandoning its strict zero-Covid policies at the end of last year, flights in and out of mainland China are limited, airfares remain elevated and Beijing has been reluctant to grant new tourist visas to foreigners. Covid tests for travellers from China to countries around the world are still common and acting as a deterrent to flying. While North America and Europe are expected to recover to pre-pandemic levels of travel this year, China is facing a longer timescale. “We expect international passenger numbers in China will only return to pre-Covid levels in 2025, with short-haul recovery outpacing long-haul,” said Eric Lin, head of research at UBS China. The “Big Three” — Air China, the country’s flag carrier, China Eastern and China Southern — have all issued profit warnings in recent weeks and were weighed down with combined record losses of more than Rmb100b ($14.4b) forecast for 2022. Air China has been hit the hardest, with international flights having accounted for 31% of pre-pandemic revenues. It expects to report losses of up to Rmb39.5bn for 2022. To bolster its financial position, the carrier raised Rmb15bn through a private placement in December, with UBS and Air China’s state-owned parent China National Aviation Holding as co-investors. China Eastern Airlines also did a similar deal that month. “Financing through the capital market is a self-rescue behaviour for these enterprises,” said Chen Wei, partner at the law firm Commerce & Finance, which advised Air China on the placement. Private airlines have fared little better, though those focused on domestic flights showed greater resilience while China was closed to the world under zero-Covid.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2023-02-27/general/chinese-airlines-left-at-the-gate-as-international-travel-takes-off
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Chinese airlines left at the gate as international travel takes off
Chinese carriers are chasing the vapour trails of the rest of the airline industry as international travel picks up again with the easing of Covid-19 restrictions. The number of passengers taking foreign trips with the country’s three main airlines last month was 10 per cent of pre-pandemic levels four years earlier, according to aviation consultancy Cirium. Despite Beijing abandoning its strict zero-Covid policies at the end of last year, flights in and out of mainland China are limited, airfares remain elevated and Beijing has been reluctant to grant new tourist visas to foreigners. Covid tests for travellers from China to countries around the world are still common and acting as a deterrent to flying. While North America and Europe are expected to recover to pre-pandemic levels of travel this year, China is facing a longer timescale. “We expect international passenger numbers in China will only return to pre-Covid levels in 2025, with short-haul recovery outpacing long-haul,” said Eric Lin, head of research at UBS China. The “Big Three” — Air China, the country’s flag carrier, China Eastern and China Southern — have all issued profit warnings in recent weeks and were weighed down with combined record losses of more than Rmb100b ($14.4b) forecast for 2022. Air China has been hit the hardest, with international flights having accounted for 31% of pre-pandemic revenues. It expects to report losses of up to Rmb39.5bn for 2022. To bolster its financial position, the carrier raised Rmb15bn through a private placement in December, with UBS and Air China’s state-owned parent China National Aviation Holding as co-investors. China Eastern Airlines also did a similar deal that month. “Financing through the capital market is a self-rescue behaviour for these enterprises,” said Chen Wei, partner at the law firm Commerce & Finance, which advised Air China on the placement. Private airlines have fared little better, though those focused on domestic flights showed greater resilience while China was closed to the world under zero-Covid.<br/>
