Air China Posts Widened Net Loss for 2025 as Costs Outpace Revenue Growth

Air China 2025 results: revenue up, losses widen as yield pressure bites

I’ve combed through Air China’s 2025 annual results so you don’t have to. Headline picture: revenue edged up, but costs outpaced that growth and the bottom line slipped back into a wider loss. International demand is rebuilding nicely, yet passenger yield (revenue per kilometre) moved the wrong way. No dividend, a bigger fleet, and a chunky capex pipeline set the scene for 2026.

Quick take: the numbers that matter

Top line grew, but yield did not

Revenue rose 2.87% to RMB171,485 million, driven by stronger international traffic. Mainland China contributed 68.50% of revenue (RMB117,458 million), while international markets climbed to 28.37% (RMB48,653 million) – up 12.91% year-on-year. Hong Kong SAR, Macau SAR and Taiwan, China accounted for 3.13%.

Passenger revenue increased 2.02% to RMB154,856 million. The drivers are telling: more capacity added RMB4,918 million, a better load factor added RMB3,978 million, but a weaker passenger yield subtracted RMB5,829 million. In short, fuller planes, but at lower average prices.

Key operating metrics you should know

• ASK (available seat kilometres – capacity): 367,641.22 million, up 3.24%.
• Passenger load factor (seats filled): 81.88%, up 2.03 percentage points.
• Yield per RPK (revenue per passenger kilometre): RMB0.5144, down 3.63%.
• Unit cost per ASK: RMB0.4818, essentially flat (-0.12%).

Cargo and mail held up: revenue rose 4.92% to RMB7,778 million. Load factor improved to 39.05% (+1.58 ppt) but yield per RFTK dipped 1.70%.

Why losses widened: costs and mix

Operating expenses grew 3.11% to RMB177,143 million, outpacing revenue. Fuel actually helped – jet fuel costs fell 6.85% to RMB50,041 million – but other lines more than offset that tailwind.

• Employee compensation: RMB37,047 million, up 8.11% (higher flight-hour fees).
• Maintenance, repair and overhaul: RMB14,814 million, up 15.30%.
• Depreciation and amortisation: RMB30,718 million, up 5.55% (bigger fleet, more flying hours).
• Take-off, landing and depot charges: RMB21,968 million, up 5.03%.

Below the line, there were a few offsets. Finance costs fell 13.22% to RMB5,553 million, and FX swung to a gain of RMB327.6 million from a loss last year. The share of profits from associates and joint ventures rose to RMB3,425.7 million, including RMB2,998 million from Cathay Pacific. Even so, the Company booked a net loss attributable to equity shareholders of RMB1,787.9 million (vs RMB232.6 million in 2024) and a basic loss per share of RMB(0.11).

Balance sheet: liquidity tighter, leverage still high

Year-end cash and cash equivalents fell 32.05% to RMB14,295 million. Net current liabilities improved to RMB82,489 million but remain sizeable, and the current ratio stayed at 0.30. The gearing ratio nudged up to 88.57%.

Interest-bearing debts by currency were heavily RMB-denominated (RMB204,118 million, 89.40%), with US dollar exposure down year-on-year (RMB23,835 million, 10.44%). Capital commitments increased 14.44% to RMB108,917 million, mostly future aircraft and equipment.

Management states the accounts are prepared on a going concern basis, citing expected operating cash flows and unutilised bank facilities.

Capacity, fleet and unit economics

Air China introduced 45 aircraft in 2025 (25 A320 series, 12 B737 series, six C919 and two C909) and retired 11. The Group ended the year with 964 aircraft at an average age of 10.36 years. COMAC types are making their presence felt: 44 aircraft in total (35 C909 and nine C919) at year-end.

Operationally, utilisation was steady at 8.89 block hours per aircraft per day, while the overall load factor (revenue tonnes vs available tonnes) improved to 68.54% (+2.04 ppt). The unit cost per ASK was flat, which is helpful, but the unit revenue side – yield per RPK – slipped. That spread explains why higher loads didn’t translate into black ink.

Dividend: none for 2025

The Board proposed no profit distribution for 2025. With losses, heavy capex and a high gearing ratio, that’s sensible, if disappointing for income seekers.

What I like vs what worries me

Positives

• International recovery: international revenue up 12.91%, with 12 routes opened or resumed.
• Cost of debt easing: finance costs down 13.22%; FX turned positive.
• Ancillary and engineering momentum: other operating revenue up 18.08% to RMB8,851 million.
• Share of associates/JVs strong, with Cathay Pacific contributing RMB2,998 million.

Watch-outs

• Yield pressure: passenger yield fell 3.63% despite better load factors – classic sign of competitive pricing (“involution-style” competition, as the Company puts it).
• Liquidity: cash down to RMB14,295 million and current ratio stuck at 0.30; net current liabilities are still RMB82,489 million.
• Capex and commitments: RMB23,754 million spent in 2025; commitments up to RMB108,917 million – this will need careful funding.
• Cost drift ex-fuel: maintenance, staff and airport charges all rose faster than revenue.

Jargon buster (30 seconds)

• ASK (available seat kilometres): seats offered multiplied by distance flown – a capacity measure.
• RPK (revenue passenger kilometres): paying passengers multiplied by distance – a demand measure.
• Load factor: RPK as a percentage of ASK – how full the planes are.
• Yield per RPK: revenue per passenger kilometre – a pricing mix metric.

Outlook: what to watch in 2026

Management’s 2026 focus is “quality and efficiency” over sheer volume. For investors, five markers will tell you if that’s landing:

1. Passenger yield stabilisation or improvement as international mix grows.
2. Unit cost discipline beyond fuel – particularly maintenance and staff costs.
3. Cash generation vs capex outflows – does operating cash flow keep covering the fleet plan.
4. Debt mix and refinancing – watch interest costs and the split between current and non-current debt.
5. Load factors on newly resumed/added international routes.

My take

This is a mixed set. Demand is clearly improving – especially internationally – and unit costs are not running away. But pricing is soft and non-fuel costs are firm. The balance sheet can carry the capex, but it leaves little room for error, so execution on yields and costs is critical. If yields firm up as international networks mature, the operating leverage could turn quickly; if competition keeps prices under pressure, 2026 may look a lot like 2025.

Net-net, a cautious stance feels appropriate until we see either yield traction or a clear step-down in ex-fuel costs. Keep an eye on quarterly traffic stats and any commentary on pricing power as travel patterns normalise.