China will give cash subsidies to airlines for two months

BEIJING (Reuters) -China’s finance ministry said on Thursday that it would offer subsidies to Chinese airlines from May 21 to July 20 to help carriers weather the coronavirus-induced downturn and higher oil prices.

Cash support will only be provided when average daily numbers of domestic flights per week are lower or equal to 4,500 flights and when the average load factors are lower than 75%, the ministry said on its website.

The maximum grant would be 24,000 yuan ($3,574) per hour to the loss-making flights, the ministry added.

Analysts expect another year in the red for Chinese airlines in 2022, on top of heavy losses for the past two years, as Beijing sticks with its zero-COVID policy to stop the spread of the virus.

Domestic air traffic has plunged because of lockdowns in Shanghai and surrounding cities. Shanghai-based China Eastern said passenger numbers collapsed 90.7% in April year on year, while Shanghai International Airport saw passenger numbers down 98.9% in the same period.

Last year, China’s aviation industry reported a net loss of 84.25 billion yuan last year, compared with a 102.96 billion yuan in the red for 2020.

Airlines alone suffered a combined loss of 67.09 billion yuan in 2021.

($1 = 6.7146 Chinese yuan)

(Reporting by Stella Qiu and Ryan Woo; Editing by Jacqueline Wong and Gerry Doyle)