BEIJING/SYDNEY, March 30 (Reuters) - China’s three biggest airlines on Tuesday reported weaker results for the final quarter of 2020 on asset impairments though some analysts still expect a rebound this year as domestic travel rises.
China Southern Airlines fell to a fourth-quarter net loss of 3.38 billion yuan ($514.37 million) after a third-quarter profit.
It booked a 2020 loss of 10.8 billion yuan after .impairments on planes, engines and other equipment of 4 billion, with much of its international fleet still grounded due to COVID-19 travel restrictions.
Beijing-based Air China, the country’s flag carrier, said its net loss widened to 4.3 billion yuan in the fourth quarter from 671 million yuan in the third, taking its full-year loss to 14.4 billion yuan.
Shanghai-based China Eastern Airlines said its net loss widened 2.7 billion yuan from 563 million, spelling a full-year loss of 11.8 billion yuan.
China’s domestic air travel market has quietly overtaken the once-dominant U.S. market in size during the pandemic.
But multiple coronavirus outbreaks before last month’s Lunar New Year halted the rebound and could lead to first-quarter losses, analysts said.
Now, with temporary testing and quarantine restrictions once again lifted, airfares are rebounding to pre-pandemic levels, bolstering the bottom lines for Chinese airlines despite rising fuel prices and somewhat a weaker currency.
“The chance is high this year that the airline industry can reach a breakeven level,” said Chen Cheng, lead small and midcap analyst at Renaissance Capital Advisors.
“The potential upside will come from further easing of travel restrictions in China and business travel will become the main driver towards the second half of the year.”
A gradual recovery in international travel in the second half should mean net profits for the top three carriers, according to analysts at Shenzhen-based Guoxin Securities.
$1 = 6.5712 Chinese yuan renminbi Reporting by Stella Qiu in Beijing and Jamie Freed in Sydney; editing by Jason Neely