Chinese Airlines Battle Extended Losses Amid Market Headwinds

China's top three state-owned airlines face their fifth consecutive year of losses. Challenges include market competition, low international demand, and supply chain issues. Despite narrowing losses, the recovery remains weak. Rising domestic capacity and falling airfares while political tensions and economic pressures hinder international travel recovery.

China's three major state-owned airlines, China Southern Airlines, Air China, and China Eastern, continue to face financial challenges despite global industry recovery. This week, they reported their fifth consecutive year of losses, citing stiff domestic competition, subdued international travel demand, supply chain difficulties, and currency depreciation.

While their annual losses have decreased significantly—from an average of $5 billion per airline during the pandemic peak in 2022 to $286 million each in 2024—their financial rebound remains sluggish. Domestic capacity exceeds 2019 levels but international travel lags due to late-lifted travel restrictions and ongoing geopolitical tensions.

According to Flight Master and Cirium schedule data, international flight capacity in March was 20% lower than March 2019. Air China's 230 million yuan net loss in 2024 highlights competitive pressure. Despite Asia's rising travel demand, falling airfares, dampened by price sensitivity and macroeconomic uncertainties, further complicate recovery efforts.

(With inputs from agencies.)