As of the evening of August 29, China Southern Airlines, China Eastern Airlines, and Air China, the three major state-owned aviation central enterprises, successively released their financial reports for the first half of 2025. The data shows that the three companies collectively incurred a total loss of over 4.7 billion yuan in the first half of the year. The core factors constraining industry profitability are the intense and malicious competition in the domestic market, severe overcapacity, and slow pace of international route recovery.
The financial data reveals that the three aviation central enterprises collectively incurred a net loss of over 4.7 billion yuan in the first half of the year. Looking at individual subsidiaries, Air China achieved an operating income of 80.757 billion yuan with a net loss of 1.806 billion yuan; China Eastern Airlines had an operating income of 66.822 billion yuan with a net loss of 1.431 billion yuan; and China Southern Airlines generated an operating income of 86.291 billion yuan with a net loss of 1.533 billion yuan.
Among the consolidated subsidiary companies under Air China, except for Cathay Pacific, Ameco, and Beijing Capital Airlines which achieved profits, the other subsidiaries all incurred losses, with Shenzhen Airlines suffering the largest deficit.
In the first half of this year, China Southern Airlines saw its losses widen by over 20% year-on-year, showing a relatively weaker performance compared to the other two major airlines.
It is noteworthy that the three major airlines have been consistently facing losses for many years. China Eastern Airlines, for example, has accumulated a net loss of over 70 billion yuan over the past five years (from 2020 to 2024). By the end of the first quarter of this year, China Eastern Airlines had a total debt of up to 244.9 billion yuan, indicating a rather dire financial situation.
Currently, the slow progress in the resumption of international routes has become a key bottleneck restricting the improvement of the three major airlines’ performance. Statistics show that in the first half of this year, the international passenger flight volume in civil aviation increased by 24.9% compared to the same period in 2024, but still lagged behind the pre-pandemic levels of 2019 by 12%, indicating that international flight capacity has yet to fully recover.
Given their dominant position in the international route market, the slow recovery of the international market has had a significant impact on the performance of the three major airlines. Due to adjustments in international flight capacity, a large number of wide-body aircraft that originally operated on Europe-America routes have returned to the domestic market, leading to an oversupply of domestic flight capacity and significant downward pressure on ticket prices.
The uncertainty of the external environment is exacerbating the industry’s pressures. In the first half of this year, the ongoing trade friction between China and the United States, coupled with frequent policy adjustments by both sides, as well as the cancellation of the tax exemption policy for small parcels by the United States, have been impacting air cargo carriers. Export goods data from the first half of the year shows a negative growth in China’s exports to the North American market, with a decrease of 8.2%, a trend that may continue into the second half of the year.
The core operational indicators disclosed by the three major airlines all indicate a comprehensive decline in revenue represented by passenger-kilometer yield. Air China’s revenue decreased by 3.765 billion yuan due to a decline in yield levels, while China Eastern Airlines had a 7.22% year-on-year decline in passenger revenue per kilometer, and China Southern Airlines saw a 6.12% year-on-year decline in passenger revenue per kilometer.
In their performance announcements, the three major airlines unanimously pointed out challenges including imbalanced market supply and demand structure, continued downward trend in passenger sources, significant diversion effects of high-speed rail network, and increased international environmental uncertainties among other multiple factors. In the first half of this year, the entire civil aviation industry found itself in a state of struggling to balance between high passenger transport volumes and constrained profit margins.
Facing a complex market environment and macroeconomic challenges, the Civil Aviation Administration of China has begun to address the malicious competition prevalent in the industry, aiming to promote healthy market development.
However, the continued losses of the three major airlines are not isolated incidents but closely tied to the sustained contraction of China’s macroeconomy. Industry experts believe that the downward pressure on the economy has led to a decrease in consumer willingness to spend, resulting in heightened sensitivity to prices among travelers. Consumers tend to opt for cheaper travel options and tickets, further intensifying the price war in the aviation market.
Looking ahead to the second half of the year, the market performance during the summer travel season will be a key indicator in assessing the industry’s trajectory. Despite a noticeable increase in summer travel demand, ticket prices continue to face sustained downward pressure.
According to Flight Manager data as of August 24, domestic flight ticket prices during the summer travel season dropped by 3.7% year-on-year, reflecting a decrease of approximately 10% compared to the same period in 2019.