Chinese airlines’ losses mitigated by domestic travel

China’s biggest airline on Saturday reported less severe losses in the second quarter as domestic travel picks up with the coronavirus outbreak brought largely under control.

The country where the disease first emerged last year has reported no new deaths since May -- allowing for a tentative return of business and tourist travel within its borders, even as the virus wreaks havoc elsewhere.

China Southern Airlines, the nation’s largest carrier in terms of passenger numbers, posted losses of 2.9 billion yuan ($422 million) in April-June, compared with 5.3 billion yuan in the first quarter from January to March.

“The Covid-19 pandemic has exerted a long-term and profound impact globally,” the company said in its results announcement, predicting further uncertainty.

But “the aviation market in China will be the first to rebound, and the overall trend of recovery and development is prosperous”, it said, noting a “strong potential demand for passenger travel” if the virus is suppressed.

Flag carrier Air China reported total first-half losses of 9.4 billion yuan, with the second-quarter loss of 4.6 billion only slightly lower than 4.8 billion posted in the first quarter.

The country’s second largest carrier China Eastern Airlines bucked the trend, however, with larger losses in April-June of 4.6 billion yuan than the 3.6 billion in January-March.

This was thanks to an aggressive pricing policy that drew travellers back to the airline but resulted in lower margins.

About 10 Chinese airlines have launched unlimited-flight deals to boost demand since the virus was stamped out through strict lockdowns, contact tracing and close monitoring of neighbourhoods.

“This is a highly significant moment because it is the first time, since the start of the Covid-19 outbreak, that a major segment of the aviation market anywhere in the world has returned to pre-pandemic levels,” said Olivier Ponti, vice-president of travel analysts ForwardKeys.

“The crunch question is whether heavy discounting will still be needed to maintain the recovery, or whether the industry will return to profitability during the upcoming Golden Week holiday in October,” he said.



Thai airlines: Seven Thai airlines are seeking a combined 24 billion baht ($770 million) in low interest loans and other support measures, the government said on Friday, joining carriers across the world in requesting state help to weather the coronavirus crisis.

airline executives made the request to Prime Minister Prayuth Chan-ocha, aiming to maintain liquidity and avoid layoffs, the government said in a statement.

“The government will consider the requests from the airlines and find ways to support operations, including unlocking air travel, and boost domestic tourism,” Prayuth said. The airlines, mostly low-cost carriers, are Thai AirAsia, Thai AirAsia X, Thai Smile, Thai Lion Air, Thai Viet, Nok airlines and boutique carrier Bangkok Airways Pcl .

NokScoot entered liquidation in June, months after the carriers previously sought similar terms in April.

Commercial air travel has all but stopped as the coronavirus continues to spread and Southeast Asia’s second-largest economy contracted over 12% in the April-June period, hit by a decline in its tourism sector.

Thailand, which had a record 39.8 million tourist arrivals last year, has recorded no foreign visitors since April when it imposed a travel ban.

The government this month scrapped plans for a “travel bubble” agreement with select countries as the number of infections rose in Asia.

National carrier Thai Airways International Pcl has been under bankruptcy protection since May and a court will decide in September if the company can go ahead with restructuring proposals.

Its budget arm Nok airlines in July received bankruptcy protection.

The airlines also urged the government to extend a tax deduction for jet fuel and reduce landing and parking fees at airports.

Separately,Low-cost airline Norwegian Air Shuttle, which was struggling even before the Covid-19 pandemic paralysed the aviation industry, said on Friday its losses quadrupled in the first half of 2020.

With a 71 per cent drop in passengers, 8,000 employees either furloughed or cut, and 140 planes grounded, Norwegian has been hit hard by the coronavirus crisis which forced it into an unwanted “hibernation”.

“This is the biggest crisis in the history of aviation since World War II and that has of course affected us,” chief executive Jacob Schram said as he presented the earnings report.

Agencies