China’s three biggest state-owned airlines posted first-half losses for a seventh consecutive year, with Air China, China Eastern Airlines and China Southern Airlines together losing about 8.2 billion yuan as surging jet fuel costs and weaker route performance weighed on results. The carriers had swung from a combined first-quarter profit to a heavy loss in the six months to the end of June, despite earlier signs of recovery in China’s aviation market.
Air China reported a loss of 2.3 billion yuan, China Eastern lost 2.2 billion yuan and China Southern posted a 3.7 billion yuan deficit. Fuel expenses rose 35% to 38% at the three airlines after higher oil prices linked to Middle East tensions, and limited hedging left them more exposed to price swings than many global peers. China Eastern also faced disrupted international routes and a soft summer travel season.
The results followed warnings last month that combined losses could reach as much as 9 billion yuan. Shares in the three airlines fell in mainland China and Hong Kong after the earnings updates.