China’s two largest airlines reported losses for the full year in 2023 as tepid demand for international travel weighed on their businesses.

China Southern Airlines said it expects a net loss of 3.5 billion yuan (S$653.7 million) to 4.7 billion yuan for the 12 months through Dec 31 due to the slow recovery of international passenger flights, oversupply in the domestic market and high oil prices, the Guangzhou-based airline said in an exchange filing on Friday (Jan 26). 

Air China said its net loss in 2023 would probably be between 900 million yuan and 1.3 billion yuan. The nation’s flag carrier also cited weak demand for overseas travel as well as fierce domestic competition and high oil prices for losses.

Both carriers have been unprofitable since 2020, when Covid started. 

The duo’s unaudited preliminary results underscore a tough final quarter for 2023 after a more robust third quarter, during which the nation’s three largest airlines, including China Eastern Airlines, returned to profitability following a strong domestic summer travel season. 

The trio are due to release 2023 earnings on March 28. 

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A ramp up of international flights this year as Chinese citizens begin to venture abroad again could see Chinese airlines record a profit in 2024, according to a November HSBC research note. 

“A faster-than-expected restoration of China-US flights is a key catalyst for the recovery of international flights and will thus ease the overcapacity issue in domestic routes,” analyst including Parash Jain wrote.

At the end of 2023, there were 63 direct flights between China and the US each week – down from 340 weekly flights before the pandemic, according to the Civil Aviation Administration of China.

China’s aviation regulator earlier this month forecast that international flights will be at about 80 per cent of pre-Covid levels by the end of the year – with weekly international passenger flights possibly reaching 6,000 by the end of 2024 from about 4,600 currently. BLOOMBERG