Affected by the epidemic, combined with the rise in fuel prices and the sharp depreciation of the RMB, Spring Airlines recorded huge losses in '22, but production and operation conditions improved drastically in Q1 in '23, and the company turned a loss into a profit, achieving net profit of 356 million yuan. Spring Airlines announced: 1) Revenue in '22 fell 22.9% year on year to 8.369 billion yuan, down 43.5% from '19. The company recorded a huge loss of 3,036 million, mainly due to: a) the impact of the pandemic on the company's supply and demand, which fell sharply by 26.8%/34.1%, respectively; b) the sharp rise in oil prices and sharp increases in maintenance and rapid depreciation and leasing expenses pushed total costs up 2.3%; 2) Q1 revenue in '23 improved sharply, up 63.6% year on year (up 6.1% from the same period in '19). The company turned a loss into a profit, achieving net profit of 366 million for Guimu. The main reasons: a) the impact of the epidemic ended, flight volume increased dramatically, operating efficiency quickly rebounded, and combined with the company's excellent revenue management, unit RPK revenue rose sharply by 10.4% compared to the same period in '19; b) The company focused on cost control and had excellent operating efficiency performance. The fuel cost per unit of ASK fell 31.0% month-on-month, up only 9.9% from the same period in '19 (unit oil price was 46.1% higher than the same period in '19). We estimate that the cost per unit of oil withheld by ASK increased only slightly by 0.1% compared to the same period in '19.
We believe that demand in the Q2 and Q3 industries is expected to recover at an accelerated pace. We are optimistic that the industry cycle will rise in the post-pandemic era, that the operating efficiency of private airlines will be strong, and that their performance will continue to improve. A recovery can be expected.
The impact of the 2022 pandemic was severe, and the company moderately slowed the introduction of aircraft. There was a net increase of 3 aircraft throughout 2022. The pandemic affected the company's supply and demand, which fell sharply by 26.8%/34.1% year on year, passenger occupancy rate fell 8.22 percentage points year on year, and passenger kilometer revenue increased 16.82% year on year (its internal line in China increased 14.9% year on year). The analysis was on the one hand, the company focused on revenue management, and on the other hand, the sharp rise in oil prices prompted the company to shift pressure on costs. The company's operating costs did not decrease but increased 2.3% throughout the year. The main reason for the analysis was the sharp rise in oil prices (+73.6% yoy), which contributed to a 17.3% year-on-year increase in aviation fuel costs. At the same time, depreciation expenses for maintenance and Feifa leasing increased 82.2%/3.2% year on year, respectively. Affected by the sharp decline in utilization, the operating cost per unit of ASK increased 39.8% year on year; the operating cost per unit of oil withholding increased 31.1% year on year, and 22.8% over the same period in '19.
The industry led the industry in improving production data on the 23rd Q1, and the passenger occupancy rate is expected to rise further in April. The company's total supply and demand in Q1 rose 71.57%/100.22% month-on-month, and 4.60%/25.76% respectively over the same period in 2019 (+2.01%/-3.86% respectively from the same period in 2019), driving the passenger occupancy rate to increase 20.23 percentage points year over year to 86.9%, down only 5.3 percentage points from the same period in '19. Supply and demand in China increased 57.98%/84.80% month-on-month, -4.62%/+15.22% respectively (up 42.70%/34.57% from the same period in 2019, respectively), and the passenger occupancy rate increased 20.80 percentage points year over year to 87.4%.