Air China fears short term operating loss due to COVID-19

Published on : Wednesday, April 1, 2020

China’s flag carrier Air China recently issued a warning in regard to the fear of short term operating loss. The warning comes in light of the coronavirus pandemic as the number of COVID-19 cases continues to rise across the globe. The aviation industry is one of the worst-hit sectors due to coronavirus spread. Air China joins various other major airlines that fear an operating loss due to the crisis.



Air China group which includes Shenzhen Airlines, Air Macau and Dalian Airlines recently discussed the outlook for 2020 in its full-year results. The COVID-19 virus that originated in the Hubei province of central China harshly affected the passenger travel demand. The airline noted a plunge in demand ever since the outbreak of the deadly virus.



The carrier said in a recent statement that domestic travel demand started reducing after the Lunar New Year, in late-January. In addition, global travel restrictions and internal travel bans reduced the demand for international routes to a large extent. It mentioned that as a result, an operating loss is inevitable at the moment. However, the loss might be incurred for the short term.



Air China also updated a full-year profit of CNY14.6 billion for the year 2019. It showed an increase of 2.1% on a year-on-year basis. The carrier’s operating profit for 2019 was slightly higher due to lower expenses coupled with more passengers and travel demand. Air China group carried 115 million passengers for the year, which showed an increase of 4.8% as compared to the previous year.



As the coronavirus wreaked havoc in the Republic of China, the country’s three largest carriers faced difficulties throughout the month of February. Each carrier witnessed domestic as well as international capacity and load factors collapse.



However, Air China is working to optimise capacity resource distribution, strengthen its cost control and improve its yield management in order to mitigate the impact of the coronavirus outbreak on the airline.



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