Daijiworld Media Network - Beijing

Beijing, Sep 10: Chinese airline carriers have been doing well in the share market compared to their Covid-battered peers. China's 1.4-billion population is eager to travel and the yuan is recovering and oil is getting cheaper.

A Bloomberg gauge of the sector shows nine of the world’s top 10 airline stocks over the past three months are Chinese, with all but Air China Ltd posting shares in double-digit gains. Meanwhile, of these top 10 airline stocks, there is one which is the odd one out, InterGlobe Aviation Ltd., which operates India’s biggest carrier, IndiGo. It is sixth on the list with a 13% advance. The top performer is low-cost carrier Spring Airlines Co., which has climbed 22%.

The coronavirus pandemic has come down hard on the airline industry as governments imposed unprecedented border restrictions and people became more reluctant to travel. The International Air Transport Association, which represents some 290 airlines, does not expect passenger traffic to recover to pre-pandemic levels before 2024.

Although the Chinese carriers have not been immune to the crisis, they have managed to recover much faster because of their vast domestic market and due to the removal of travel curbs as the outbreak, there was brought under control.

Stock gains have accelerated this month, in part on the yuan’s strength. That lowers the airlines’ costs on fuel as well as debt, some of which is borrowed in US dollars. Recent oil price declines further cap fuel expenses, which unlike many carriers Chinese airlines do not hedge.

However, China's major airline carriers, Air China, China Southern Airlines Co. and China Eastern Airlines Corp. are expected to be unprofitable in the second half of this year, according to analyst forecasts compiled by Bloomberg. They each have posted first-half losses of more than 8 billion yuan ($1.2 billion).