Air China has joined a growing list of airlines in warning of an operating loss “in the short term”, as the coronavirus outbreak continues to wreak havoc.
Discussing the outlook for 2020 in its full-year results, the Air China group noted the impact that the outbreak — which originated in the Hubei province of central China —has had on passenger travel demand.
This was particularly so after the Lunar New Year, in late-January, when it saw domestic travel demand plummet. “Global travel restriction has also reduced the demand for international routes,” it adds.
“[A] loss may be incurred inevitably in the short term,” the carrier states, but did not elaborate.
To mitigate the outbreak’s impact, Air China says it is working to optimise capacity resource distribution, strengthen its cost control and improve its yield management.
For 2019, Air China posted a full-year profit of CNY14.6 billion, an increase of 2.1% year-on-year.
The Star Alliance carrier is the only Chinese carrier so far to have raised the red flag on the outbreak’s impact on profitability — compatriots China Southern and China Eastern, in their respective annual results discussion, did not offer any similar insights.
China Eastern states that the outbreak brought about “significant uncertainty” for the year. China Southern echoed similar sentiments, adding that the outbreak has impacted the group’s operations and financial position”, though it is confident in its liquidity position.
February was a difficult month for China’s three largest carriers as the country battled the outbreak and was the subject of travel restrictions globally. Each carrier saw capacity and load factors collapse, both domestically and internationally.