Chinese Airlines’ 2023 Losses Reflected and Well Expected, We Look Ahead to a 2024 Turnaround

The big three Chinese airlines we cover, Air China, China Southern Airlines, and China Eastern Airlines, remained lossmaking in 2023. The announced net losses are all within the ranges of their preliminary guidance and hence are well expected. As international passenger traffic continues to recover, we project all three airlines to turn around in 2024 with CNY 4.9 billion net income for Air China, CNY 6.1 billion for China Southern, and CNY 1.0 billion for China Eastern. We keep our fair value estimates at HKD 6.40 (CNY 5.90) for Air China, HKD 4.70 (CNY 4.30) for China Southern, and HKD 2.58 (CNY 2.36) for China Eastern. Air China is our preferred pick among the three as we think it should benefit more from the rebound in business travel due to larger exposure to the premium market.