Air China, China Eastern Eye Long-Term Growth After Losses

China
Credit: Joe Pries

Air China and China Eastern Airlines both remained in the red for all four quarters of 2020, racking up annual net losses of CNY14.4 billion (£2.2 billion) and CNY11.8 billion respectively.

Despite the short-term uncertainties in both domestic and international recoveries, China’s second- and third-largest airlines are looking to be the long-term beneficiaries of various government schemes. 

Both carriers are eyeing the various Chinese air hub and economic zones projects under development, namely the Guangdong-Hong Kong-Macau Greater Bay Area, the Beijing-Tianjin-Hebei Integration Plan, and the Yangtze River Delta Integration Plan. The carriers may readjust their hub and network strategies around them. 

China Eastern also hopes to optimize its digitalization efforts and focus on its research and development center with the aim of exploiting future technologies and mobile applications.

China Eastern’s annual revenue in 2020 halved 51.5% year-on-year (YOY) to CNY58.6 billion, with total costs at CNY70 billion. Its new subsidiary OTT Airlines—which flies exclusively the COMAC ARJ-21—faltered, generating CNY175 million in revenue since its creation in February 2020 but falling to a CNY58 million loss. Of all China Eastern subsidiaries, only Shanghai Eastern Flight Training was profitable, earning a net profit of CNY340 million.

Flag-carrier Air China took in CNY69.5 billion in revenue, down 49% YOY, while costs dropped 32.3% YOY to CNY85 billion. The airline mounted 13,120 passenger-cargo flights to help shore up CNY8.5 billion in cargo revenue. Most were destined for the European market.

In addition, Air China said it had obtained bank facilities worth CNY174.7 billion of which approximately CNY52.5 billion has been drawn. The airline is confident that the remaining amount is sufficient to meet its demands for working capital and future commitments until the recovery comes.

Regardless of results, China Eastern remains on track to take delivery of 43 aircraft in 2021, including 23 Airbus A320s, while Air China has 59 aircraft due for 2021 delivery, including 48 A320 family aircraft.
 

Chen Chuanren

Based in Singapore, Chen Chuanren is the Southeast Asia and China Correspondent for Air Transport World, joining the team in July 2018.