China’s Major Airlines Remain in Red in First Half of 2025
The two largest airlines in China reported reduced losses in the first half of 2025, though they remain in negative territory. The financial results reflect how the recovery of the aviation sector in the Asian giant remains fragile in the face of a saturated market and pressure from increasingly tight pricing.
Flag carrier Air China reported a net loss of 1.8 billion yuan (252 million dollars) between January and June, representing a 35% reduction compared to the loss of 2.78 billion yuan in the same period last year.
For its part, Guangzhou-based China Southern Airlines recorded a deficit of 1.5 billion yuan, a 64% cut compared to the 4.21 billion yuan loss in 2024.
Factors Impacting the Sector
The companies attribute their poor results to an imbalance between supply and demand, growing traveler price sensitivity, and direct competition from China’s increasingly extensive high-speed rail network. These challenges are compounded by geopolitical uncertainty and the slow recovery of international business and first-class flights, which limit revenue on higher-margin routes.
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Although the summer season usually provides relief for the industry, it has not been sufficient this year. According to data from Flight Master, as of August 24th, the average fare for domestic tickets issued in July and August was 788 yuan (110 dollars), which is 3.7% less than last year and 10.6% below 2019 levels.
International Capacity Nearly Recovered, but with Low Margins
International supply has already reached 93% of pre-pandemic levels; however, analysts warn that yields remain low.
In the opinion of US-based independent analyst Li Hanming, the coming months will remain complicated: “The underlying problems remain unresolved. The absence of long-haul intercontinental flights, particularly to North America, creates significant overcapacity and fierce competition on domestic routes and short-haul flights within Asia-Pacific,” he explained.
While global airlines have returned to profitability, China’s big three continue to post losses, placing them as laggards in the post-pandemic recovery.
China Eastern, Under Scrutiny
China Eastern Airlines is expected to announce its results this Friday. The Shanghai-based airline already warned last month that it anticipates a deficit of between 1.2 and 1.6 billion yuan for the first half, compared to a loss of 2.77 billion yuan in the same period in 2024.
Adding to the financial pressure is a corporate scandal: in June, the Central Commission for Discipline Inspection of the Communist Party announced that Liu Shaoyong, the former chairman of the company, was under investigation for “serious violations.” Liu led the airline from 2009 to 2022, a period which included the MU5735 accident in March 2022 that resulted in 132 fatalities.
To date, China’s civil aviation authority has not published the final report on the causes of the tragedy, keeping the debate about corporate governance in the aviation sector alive.
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