Key facts
- Air China, Shenzhen Airlines, and Hainan Airlines will purchase a total of 95 Airbus aircraft.
- The combined list price for the 95 Airbus jets is approximately $17.8 billion.
- Air China and Shenzhen Airlines will buy 55 aircraft for $12.4 billion, including wide-body A350-900s and narrow-body A320neos.
- Hainan Airlines will purchase 40 A320neo-family jets for up to $5.4 billion.
- Deliveries for these aircraft are scheduled between 2028 and 2032.
- Major Chinese airlines are warning of significant first-half losses due to weak demand and high fuel costs.
China's largest airlines are bracing for significant first-half losses as they enter the peak summer travel season, with analysts warning of a challenging outlook due to weakening consumer demand and escalating fuel costs. Despite these headwinds, three major carriers—Air China, Shenzhen Airlines, and Hainan Airlines—have placed substantial orders for new Airbus aircraft, signaling a push to expand capacity and modernize fleets with more fuel-efficient jets.
Air China and its unit Shenzhen Airlines will acquire a combined 55 Airbus aircraft for $12.4 billion, including 15 A350-900 wide-body jets and 40 narrow-body A320neo-family aircraft. Hainan Airlines separately agreed to purchase 40 A320neo-family jets for up to $5.4 billion. Deliveries for these new planes are scheduled between 2028 and 2032. The actual transaction prices are expected to be lower than list values due to significant discounts offered by Airbus for these large orders.
These orders come as Chinese carriers rebuild their fleets post-pandemic, even as they face a difficult market. Air China has flagged a potential net loss of up to 2.6 billion yuan for the first half of the year, attributing it to "drastically squeezed" profit margins from elevated fuel prices. Other Chinese airlines, including China Eastern and China Southern, have also recently placed large orders with Airbus. The new aircraft are anticipated to increase the Air China group's total capacity by approximately 7.1% and Shenzhen Airlines' by 4.3%, with some replacing older jets.
Analysts, such as those at HSBC, predict continued losses for Chinese carriers, projecting a collective loss of around 16.8 billion yuan in 2026, contrasting with current market expectations of a profit. The airlines face a dilemma of raising ticket prices to cover fuel costs, which could deter passengers, or absorbing the costs, impacting profitability. Factors like a 'negative wealth effect' on consumer spending and rising ticket prices are cited as drivers of weak demand, with projected traffic for July and August expected to decrease year-on-year.