The Big Three Airlines' 2025 Financial Reports Wrap Up: Who Smiled, Who Cried?

Questioning AI · Can China Southern Airlines’ profit turnaround be credible and sustainable?

21st Century Business Herald Reporter Gao Jianghong Intern Zhang Heyun

On March 31, the financial reports of China Eastern and China Southern Airlines for 2025 were released in succession, and by then the financial reports of all three major airlines—also including Air China—had been collected. The overall picture of the industry’s recovery has become clearer: some airlines have been the first to cross the line into profitability, while others have steadily reduced losses and are approaching breakeven, delivering a mixed but hopeful set of answers.

Among them, China Southern Airlines’ net profit margin of 857 million yuan first broke the profitability dilemma it had faced since 2020, becoming the first company among the three to achieve an annual turnaround from losses. But even amid the joy, there are still hidden concerns: although China Eastern Airlines and Air China have not fully shaken off losses, the scale of their improvement is obvious, and the effectiveness of their loss reduction is gradually becoming apparent.

What is especially worth noting is that all three major airlines recorded year-on-year revenue growth: Air China’s operating revenue rose by 2.87%, China Eastern’s by 5.92%, and China Southern’s by 4.61%. The strong rebound of the international market has become the core engine driving performance, and behind this rebound are both precise efforts in route planning and ongoing deep work on cost reduction and efficiency improvement.

International Routes as the Core Growth Engine

In 2025, all three major airlines saw year-on-year growth in revenue. Their business fundamentals continued to recover steadily, and the restoration of international routes has become a key lever pulling performance.

China Southern Airlines not only achieved a turnaround in net profit attributable to the parent company, but its net profit excluding non-recurring gains and losses also reached 145 million yuan, achieving a “double turnaround.” China Eastern’s net loss attributable to the parent company was 1.633 billion yuan, a year-on-year reduction of 2.593 billion yuan in losses, and the total profit for the period was 274 million yuan, turning from loss to profit on a year-on-year basis. Air China’s net loss attributable to the parent company was 1.77 billion yuan, but its operating cash flow performance was impressive: the net cash flow from operating activities for the full year was 42.045 billion yuan, up 21.71% year on year. In addition, in the third quarter of 2025, all three major airlines achieved collective profitability in a single quarter, laying the foundation for recovery over the full year.

However, it needs to be pointed out that China Southern’s “double turnaround” has a bit of “water content.” China Southern’s logistics unit, which was originally planned to list last year and was expected to make the largest contribution to its profit, withdrew its IPO due to unfavorable market conditions. As a result, it remains within the China Southern Group and continues to contribute 3.575 billion yuan in net profit.

Fortunately, the explosive growth of international routes has become the core driving force behind each airline’s performance recovery. The comprehensive rebound in international travel demand in 2025 provided the core support for growth in international routes. Data from the Ministry of Commerce shows that in 2025, the scale of China’s travel service exports reached 393.98 billion yuan, up 49.5% year on year, making it the fastest-growing sector in service exports. This includes consumer-type travel such as personal tourism, studying abroad, and medical visits, as well as various business travel, which boosts international passenger demand in a comprehensive way. At the same time, China has continued to roll out measures such as visa facilitation and international payment facilitation to optimize the international consumption environment, further stimulate inbound consumption potential, make “ChinaTravel” a new trend among overseas tourists, and form a two-way demand pull from both outbound and inbound travel.

Judging from the three airlines’ actual operating data, the effects of demand recovery are particularly evident. China Eastern’s international passenger transportation turnover recorded the largest year-on-year increase, reaching 19.77%, and international revenue grew significantly. China Southern’s investment in international passenger transportation capacity (measured by available seat kilometers) increased by 18.46% year on year, while its international passenger transportation turnover (measured by passenger-kilometers paid) grew by 19.57% year on year. The international route load factor increased by 0.78 percentage points year on year. Air China’s international passenger revenue grew by 14.13% year on year, and its international capacity input grew by 4.8% year on year.

In terms of operating efficiency, the recovery of international routes delivers benefits to airlines in more than one way: it improves the utilization rate of wide-body aircraft, while also reducing domestic market capacity deployment and easing competitive pressure. The recovery of international routes effectively activates airlines’ idle wide-body aircraft assets, significantly improving operating efficiency and addressing the pain point of asset idleness.

Meanwhile, competition in China’s domestic civil aviation market is intense and fare pressure remains, forcing airlines to shift toward international markets to find new room for growth. International routes, with their relatively stable earnings levels, have become the key to easing domestic competitive pressure. Price wars in the domestic market have pushed airlines’ revenue levels down. For international routes—especially long-haul routes—the average fare per customer is relatively stable and demand elasticity is smaller, allowing airlines to effectively make up for domestic revenue shortcomings. The route plans of the three airlines also confirm this logic: for example, during the 2026 Spring Festival travel season, China Southern will add multiple international hotspot routes from Zhengzhou to Bangkok, Hanoi, and Singapore, among others.

As the Ministry of Commerce, together with relevant departments, issued policy measures on “Promoting the Export of Travel Services and Expanding Inbound Consumption,” focusing on various inbound scenarios and improving inbound facilitation services, it provides broad space for the three airlines to expand routes to countries along these routes. All three airlines intend to open new international routes and increase the frequency of existing international routes in 2026 to consolidate growth. China Eastern has stated that in 2026 it will optimize the domestic market layout, expand into international and emerging markets, optimize capacity allocation, improve aircraft utilization, deepen industrial coordination, and establish a dynamic cost control system.

Trade Volume for Price: Double Pressure on Competition and Costs

Air China’s financial report shows that in 2025 the passenger load factor improved, but the revenue level continued to decline. Its full-year passenger load factor rose to 81.88%, and the number of transported passengers exceeded 160 million. However, passenger revenue per passenger-kilometer fell in parallel: it decreased from 0.5338 yuan to 0.5144 yuan, a decline of 3.6%. Overall, the company’s operating profit for the year narrowed losses: it reduced losses from -34.3 billion yuan in “24” to -20.5 billion yuan. China Eastern in the same period also saw a contrast of “more volume but lower prices.” In 2025, its passenger revenue per passenger-kilometer was 0.493 yuan, down 3.71% year on year from 0.512 yuan in 2024. China Southern’s passenger revenue per passenger-kilometer also edged down slightly—from 0.48 yuan per passenger-kilometer in 2024 to 0.46 yuan per passenger-kilometer—confirming the impact of China’s domestic civil aviation “price war” on the earnings of traditional airlines. This performance of the three major airlines is also not an isolated case, but a necessary result under industry competition conditions.

On the one hand, domestic airlines have been stepping up capacity deployment, especially on popular domestic routes (such as Beijing–Shanghai and Beijing–Guangzhou). With serious homogenized competition, price wars have become the norm. To avoid a decline in load factor, the three major airlines have to lower ticket prices and increase the number of discounted-cabin seats. Even if the load factor rises, unit passenger revenue also declines accordingly. On the other hand, low-cost airlines continue to expand, further squeezing the pricing space of traditional airlines. As a result, airlines such as China Eastern and Air China have been forced to follow suit and cut prices on certain medium- and short-haul routes, leaving passenger revenue efficiency under continuous pressure.

Although the recovery of international routes directly boosted the overall passenger load factor, at the same time, the revenue efficiency of international routes is significantly lower than that of domestic routes. Therefore, overall passenger revenue levels are not impressive.

Also worth mentioning is that the three major airlines’ performance is largely dragged down by their subsidiaries. For Air China, besides its investments in Cathay Pacific, Ameco, and AVIC Financial that are profitable, most other subsidiaries and invested companies are loss-making, and the losses are substantial. Shenzhen Airlines posted a loss of 1.244 billion yuan last year, Shandong Airlines suffered a loss of 780 million yuan, and Macau Airlines also recorded a loss of 655 million yuan. Among China Southern’s equity-invested companies, Zhongchuan Airlines suffered the largest loss, with a net loss of 1.644 billion yuan. Compared with this, the performance of China Eastern’s controlling and equity-invested companies is slightly better: China Eastern Jiangsu suffered the largest loss of 791 million yuan, Zhonglian Airlines lost 358 million yuan, and China Eastern Wuhan lost 105 million yuan. The other four equity-invested companies were profitable, including Shanghai Airlines, which had previously often been loss-making.

The three major airlines’ operating performance improved substantially, largely due to the overall decline in jet fuel prices in 2025. Air China’s aviation fuel costs decreased by 3.679 billion yuan year on year, and its net foreign exchange gains reached 328 million yuan. China Southern’s aviation fuel costs decreased by 2.463 billion yuan year on year, while China Eastern’s decreased by 1.739 billion yuan.

However, the outbreak of chaos in the Middle East at the beginning of 2026 and the closure of the Strait of Hormuz caused aviation fuel costs to surge. As a result, China’s three major airlines’ revenue management in 2026 will undoubtedly face major challenges.