These airlines are back in the black — they’re looking to China as the next bright spot

Three major airlines in Asia are back in the black, rebounding from their pandemic doldrums as global travel picks up, and they’re all saying that China could be the next bright spot for them. Just this week, Singapore flag carrier Singapore Airlines posted a record net profit of S$2.16b ($1.61b) for the financial year ended March. This was its highest net profit in its 76-year history and a stark reversal from the loss of SG$962m recorded in the previous financial year. In a further sign of financial strength, the airline also announced its intention to redeem SG$3.1b of mandatory convertible bonds. It comes six months after the company redeemed another tranche of mandatory convertible bonds worth SG$3.5b. Japan’s All Nippon Airways also saw its first full year profit since the Covid-19 pandemic started. ANA recorded a net profit of 89.4b yen ($650.3m) for the year ended March, compared to a net loss of 143.6b yen the year before. This has already surpassed pre-pandemic levels in 2019 fiscal year that ended March 2020. At that time, ANA posted a net profit of just 28b yen, less than a third of its current net profit. Japan Airlines also saw a turnaround in its financial year ended March, with full year net profit coming in at 34.4b yen, in contrast to the 177.5b yen loss in the same period a year ago. All three airlines are looking to China to power further growth. SIA said travel demand from March to June “remains robust,” underpinned by the recovery in air travel in East Asia. “Forward sales remain healthy across all cabin classes, led by a strong pick up in bookings to China, Japan, and South Korea,” the carrier said in its earnings statement. Executive vice president for commercial Lee Lik Hsin said during the earnings briefing on May 17 that the airline is “excited” about China’s reopening, and that travel will recover when stakeholders like tour operators ramp up their bookings to China in the months to come. This sentiment was also shared by JAL. While the Japanese carrier managed to capture demand from international passengers on Japan-bound routes in its previous financial year, the international segment is expected to see further growth given the easing of restrictions on the China routes. ANA did not name any specific country or region it was looking to for growth, but the airline said the environment in the industry “is improving rapidly,” with domestic flights seeing an easing of activity restrictions, and international flights seeing countries lift entry restrictions.<br/>