A HSBC Global Research report has outlined the possibility of China’s three largest carriers turning profitable in first quarter of the year, on the back of record traffic results. 

The report, released 18 April, bases it forecast on data from the China Air Transport Association, which has said several Chinese carriers will report profits for the quarter ended 31 March. 

China Southern China Eastern

Source: Creative Commons

The ‘Big Three’ – comprising Air China, China Eastern Airlines and China Southern Airlines – are also expected to do so, “given their leading position in the domestic market”, states HSBC. 

The forecast comes a day after Chinese airlines saw their first-quarter passenger traffic reach an all-time high, with domestic traffic recovering well beyond pre-pandemic levels. 

Data from the Civil Aviation Administration of China shows Chinese carriers to have carried close to 180 million passengers in the January-March quarter this year, 38% higher year on year, and more than 10% higher compared to the first quarter of 2019. System-wide traffic grew 46% year on year, and was 13% higher than pre-pandemic levels. 

Meanwhile, HSBC also reiterates earlier forecasts that the ‘Big Three’ will swing to the black this year, though they backed down on expectations of a record full-year profit. 

HSBC says it has lowered its full-year profit forecasts on the back of higher fuel costs, coupled with softening yields this year as capacity ramps up. 

Despite China having opened its borders for a year, the three carriers all reported net losses in 2023, though China Southern and Air China eked out a decent operating profit. 

HSBC also notes that the April-June quarter “looks promising”, citing strong forward bookings during the week-long Labour Day holidays in May. In particular, travel demand to Europe is on the up, and HSBC believes that among the ‘Big Three’, Air China “should benefit the most”, given its wider exposure to the European market.