Air China (00753 HK) recorded a shareholders' loss of RMB3.5 billion in Q3 2021, which was 4.3x higher than the previous year. The net loss also widened by 2.1% to RMB10.3 billion. RPK and ASK decreased by 10.7% and 18.2% respectively in Q3 2021. Revenue increased slightly by 5.2% to RMB19.8 billion in Q3 2021, thanks to better yields from the business segment. Operating costs increased due to higher jet fuel prices this year. The Company recorded a finance cost of RMB1.1 billion in Q3 2021 (vs. finance income in Q3 2020) due to significant increase in borrowings. We have widened our loss assumptions for 2021 by 89.9% to RMB13.8 billion due to weaker passenger traffic and a spike in oil price. In Q4 2021, we expect oil price to remain at a relatively high level, expecting an average of US$73 per barrel in 2021. We expect oil price to slightly drop in 2022 onwards as supply should ramp up in OPEC and US. In terms of passenger traffic, domestic routes will be working at sub-optimal levels due to a spike of COVID-19 cases in Oct., and should be negatively affected in Q4. We maintain our international routes assumptions unchanged.
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