July 15 was bad news for the Chinese economy as the country’s three major airlines lost $7.8 billion in the year’s first half.
After the Chinese regime proclaimed that three major airlines in China announced orders for 292 Airbus A320 aircraft worth about $37 billion from the European multinational aerospace corporation Airbus. However, on July 15, the three airlines simultaneously announced losses in the first half of 2022, with a total loss of $6.8 billion to $7.8 billion in the year’s first half. The Chinese media has called this contract the “Epic Big Order.”
Air China, China Eastern Airlines, and China Southern Airlines all have losses of more than $1.5 billion: Air China expects a loss of $2.7 billion to $3.1 billion; China Eastern Airlines expects a loss of $2.5 billion to $2.9 billion; China Southern Airlines expects a loss of $1.5 billion to $1.8 billion.
Regarding the leading cause of losses, the three major airlines all said that the domestic civil aviation industry suffered many shocks, such as consecutive epidemics, high oil prices, and depreciation of the yuan.
Among them, Shanghai-based China Eastern Airlines announced that in the first half of 2022, due to the continuous impact of the epidemic, civil aviation faced unprecedented difficulties, and civil aviation volume declined. As a result, the total number of transport and passenger traffic decreased by 46.7% and 36.7%, respectively, over the same period in 2019.
However, earlier on July 1, Air China, China Southern Airlines, and China Eastern Airlines announced that they had signed a sales contract with Airbus with a total contract value of up to $5.5 billion.
According to Sina Finance, this is the most significant aircraft order in the history of the three major airlines, with the largest number and the highest order value. The three airlines said this transaction aligns with the company’s “14th Five-Year Development Plan” and market demand. CGTN also reported that the three airlines said the aircraft business transaction is in line with market demand and is based on confidence in the future development of China’s civil aviation industry.
Sina said that Airbus responded positively to the “monumental” large order, saying the new order “represents the positive recovery momentum and prosperity of the Chinese aviation market.”
It is worth noting that Song Zhiyong, director of the Civil Aviation Administration of China, mentioned during the mid-year work teleconference on July 8 that from 2020, the epidemic suddenly affected the development of civil aviation. Safety risks stemming from the epidemic continue to accumulate, pressure on production and operations continues to increase, and the extent of the epidemic far exceeds expectations.
Song Zhiyong revealed that “due to the continuous impact of the epidemic, the production of civil aviation fell to a low level in the first half of the year. As a result, when the daily flight volume was at its lowest level, there were only 2,967 flights, equal to 17.8% over the same period in 2019 and the overall loss amounted to $16.1 billion.”
Song Zhiyong mentioned that since the pandemic broke out in 2020, China’s civil aviation industry has suffered a cumulative loss of nearly $44.4 billion.
“As of now, the average debt-to-asset ratio of airlines is up to 82.2%, an increase of 11.9 percentage points compared to before the epidemic, and the debt ratio on average assets of 12 airlines has exceeded 100%,” said Song Zhiyong.
More bad news for the Chinese economy
On July 15, the Bureau of Statistics of China released its GDP figures for the first half of 2022. Official data shows that Shanghai’s GDP fell 13.7% year-on-year in the second quarter. Another significant economic province is Jiangsu, down 1.1% year on year. Beijing is down 2.7% year-on-year. Jilin and Hainan provinces fell by 4.5% and 2.5%, respectively.
Guangdong province, another stable economic growth province, posted year-on-year growth in the second quarter of only 0.7%. Only small provinces like Inner Mongolia and Chongqing recorded more than 3% growth.
The country’s GDP grew 0.4% year-on-year in the second quarter, 4.8% in the first quarter, and 2.5% in the first half, the Bureau of Statistics said.
Many believe that the CCP’s statistics have been “diluted.” The actual economic situation may be more severe than these figures.
A few days ago, professor Zheng Yuhuang of Tsinghua University said in a video that in the first half of 2022, 460,000 companies in China closed, and 3.1 million household businesses also disappeared.