the demand for civil aviation travel is declining, and the life of the aviation department is not easy, but some people are still generous.
On January 24, China Express Airlines Co.Ltd(002928) released the performance forecast for 2021, which said that the net profit loss attributable to shareholders of Listed Companies in 2021 is expected to be 69 million to 105 million yuan, and the profit in the same period in 2020 will exceed 600 million yuan, turning from profit to loss.
At the same time, China Express Airlines Co.Ltd(002928) also issued a plan for non-public offering of shares. It is planned to raise no more than 2.5 billion yuan, half of which is planned to be invested in the introduction of four A320 series aircraft.
performance profit to loss
Since 2020, under the impact of the epidemic, the aviation industry has been hit hard, and Chinese airlines have suffered losses in varying degrees. In 2020, the three major airlines lost 37.1 billion, while China Express Airlines Co.Ltd(002928) made profits in the case of losses in the whole industry that year. According to the financial data, China Express Airlines Co.Ltd(002928) in 2020, the operating revenue was 4.727 billion yuan, a year-on-year decrease of 12.56%, and the net profit attributable to shareholders of listed companies was 613 million yuan, a year-on-year increase of 21.74%.
However, this profit trend did not continue in 2021.
As for the change of performance, China Express Airlines Co.Ltd(002928) said in the announcement that in 2021, the company’s operating revenue fell year-on-year, which was mainly due to the continuous recurrence of the epidemic in some parts of China caused by the spread of the covid-19 epidemic abroad, and the significant decline in the travel demand of civil aviation passengers due to the impact of the normalized epidemic control policy; At the same time, in order to further improve the safety operation level, the company has taken comprehensive and strict safety investigation and rectification measures, which has a certain impact on the delivery of the company’s transportation capacity. In addition, the continuous rise in oil prices throughout the year led to a significant increase in the company’s aviation fuel costs. Combined with the above factors, the company’s net profit decreased significantly.
In addition, China Express Airlines Co.Ltd(002928) the impact of non recurring profits and losses on the net profit attributable to shareholders of Listed Companies in 2021 was about 11.4878 million yuan (115 million yuan in the same period of last year), mainly due to the decrease of asset disposal income compared with the same period of last year.
The performance of airlines is closely related to travel demand. In 2021, the annual passenger traffic volume of the industry totaled 440 million, with a year-on-year increase of 5.5%, about 67% of that in 19 years. Among them, the first half of the year continued to recover, but in the second half of the year, due to the impact of the epidemic, the passenger transport volume of tourism fell sharply.
According to the public data, from each quarter of 2021, the passenger traffic volume in the first quarter was 102 million, a year-on-year increase of 37.5%, 63.4% of the same period in 2019; In the second quarter, the passenger traffic volume of the industry was 143 million, a year-on-year increase of 96%, 89% of the same period in 2019. Summer should have been the traditional peak season of civil aviation transportation, but the epidemic in Nanjing spread to many provinces and cities across the country, interrupting the warming trend of summer travel. In the third quarter, the passenger traffic volume fell 25% month on month to 108 million, a year-on-year decrease of 20%, 61% of the same period in 2019. The fourth quarter was the off-season, and then superimposed with the impact of the epidemic, the number of passengers was about 88 million, a year-on-year decrease of 37%.
In addition to the industry impact, in 2021 China Express Airlines Co.Ltd(002928) also encountered the “black swan” incident, exposing potential safety hazards. According to media reports, on July 5, China Express Airlines Co.Ltd(002928) an unsafe incident occurred during the takeoff of a crj900 aircraft at Yan’an airport; On August 29, flight China Express Airlines Co.Ltd(002928) g54394 from Korla, Xinjiang to Aksu had an accident during landing and skidded off the runway. The number of flights on China Express Airlines Co.Ltd(002928) decreased significantly after the two incidents. According to the statistics of flight steward, the average daily flight volume of China Express Airlines Co.Ltd(002928) in 2021 decreased by 27% year-on-year, including 42% year-on-year in the third quarter and 64% year-on-year in the fourth quarter.
In addition, the performance of airlines is also affected by oil price fluctuations. According to the Research Report of Huachuang securities, the oil price continued to rise in 2021. The comprehensive mining price of China’s aviation oil increased from 3261 yuan / ton in January 2021 to 5384 yuan / ton in December. The average monthly price of the whole year was 4326 yuan / ton, an increase of about 40% year-on-year, corresponding to a significant increase in the cost of aviation oil of the company.
fixed additional aircraft
In addition to disclosing the performance forecast, China Express Airlines Co.Ltd(002928) also issued an announcement to terminate the public offering of convertible corporate bonds of 700 million yuan, and the total amount of funds raised by non-public offering shall not exceed 2.5 billion yuan. Among them, 1.25 billion yuan is used to introduce four A320 series aircraft, 500 million yuan is used to buy 14 aircraft standby generators, and 750 million yuan is used to supplement working capital.
For the introduction of four A320 series aircraft, China Express Airlines Co.Ltd(002928) said in the announcement that the improvement of the fleet size will help to enhance the company’s core competitiveness and profitability, which is the premise for the company to further improve the regional route network.
According to different market positioning, the aviation market can be divided into trunk airlines and branch airlines. The demand for trunk Airlines is mainly concentrated in a few central cities, while the demand for feeder Airlines is scattered in most small and medium-sized cities.
And China Express Airlines Co.Ltd(002928) is the only large-scale independent regional airline in China. As of the end of June 2021, its scale is 55, including 38 crj900 series, 3 ARJ21 series and 14 A320 series.
Qi Qi, an expert in civil aviation resources, said in an interview with reporters that China Express Airlines Co.Ltd(002928) in order to maintain its market scale and profitability, it actually needs a larger and more aircraft fleet. The A320 series introduced by this fund-raising is also a more needed model for China Express Airlines Co.Ltd(002928) at present, which is also related to the company’s long-term planning.
According to the data, crj900 series and ARJ21 series are regional aircraft, and the passenger capacity of standard cabin layout is no more than 90, while A320 series is a medium-sized passenger aircraft with 150 passengers. In fact, in recent years, with the economic development and consumption upgrading of small and medium-sized cities, the demand for regional airlines is also increasing. According to the Research Report of Huachuang securities, the medium and long-term space of the regional market is still huge. The recently announced “14th five year plan” of civil aviation proposes to “actively serve the regional coordinated development strategy and vigorously develop regional aviation”. China Express Airlines Co.Ltd(002928) based on an in-depth understanding of the characteristics and demand pain points of the regional aviation market, the business model and innovation ability adapted to China’s regional aviation market still have strong competitiveness.
In terms of expanding the size of the fleet, China Express Airlines Co.Ltd(002928) has made great moves before. On November 3, 2020, China Express Airlines Co.Ltd(002928) signed the purchase aircraft series agreement with COMAC, which will purchase and receive a total of 100 ARJ21 series and C919 series aircraft from COMAC, and deliver them within ten years from 2020. Among them, 50 are confirmed as ARJ21 series aircraft, and the other 50 can be part or part of C919 series aircraft. Statistics show that C919 aircraft is China’s first single channel large trunk airliner developed in full accordance with international advanced airworthiness standards, with a seat class of 158-168 seats.
However, under the influence of the epidemic, the demand for civil aviation travel has declined sharply, and the company has changed from profit to loss. At this time, whether the introduction of large-scale fund-raising aircraft will lead to increased costs, pressure on performance and whether market demand can digest the new capacity. On these issues, the reporter tried to interview China Express Airlines Co.Ltd(002928) today, but as of press time, no response has been received from the other party.
Qi Qi analyzed to reporters that if the funds are successfully raised, it will take a time period to introduce the aircraft from order to delivery, as well as the procurement of relevant aviation materials and engines. At that time, the epidemic may be coming to an end, so the action of introducing the aircraft is also paving the way for the improvement of the carrier’s transportation capacity in the post epidemic era.
