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2024.07.24

Word count: 1568, reading time: about 2.5 minutes

Introduction: Air cargo companies can still make good profits after the epidemic.

Author |First Financial Daily Chen Shanshan Wen Xinqi

On July 21, an Airbus A300 aircraft of Youhe Datong Airlines was put up for auction on JD.com.

No one made a bid during the two-day auction, and the cargo plane was ultimately unsold on July 22.

This is the second time that this Airbus A300 aircraft has failed to sell. Prior to this, Youhe Datong Airlines had two 747 aircraft auctioned at a discount on JD.com, which also failed to sell twice in a row.

Behind the auction of aircraft assets is the reality of Youhe Datong's bankruptcy. In March this year, the Huangpi District People's Court of Wuhan City, Hubei Province issued a civil ruling, declaring Youhe Datong Airlines bankrupt. This is also the first domestic airline to declare bankruptcy after the epidemic.

Flights were suspended before the pandemic

Founded in 2008, Youhe Datong Airlines has its main base at Wuhan Tianhe International Airport, and also has operating bases in Shenzhen, Kunming, Tianjin and other places.

The company is mainly engaged in air cargo business. At its peak, it owned 13 large and medium-sized freighters, including 3 Boeing B747-200s, 7 Airbus A300-600s, and 3 leased Boeing B747-400 aircraft.

According to the reporter, as early as 2019, before the outbreak of the epidemic, many all-cargo aircraft under Youhe Datong Airlines had been grounded. At that time, affected by the macroeconomic environment and the tightening of financial credit policies, many companies had problems with capital turnover. Coupled with the continued downturn in the international air cargo market at that time, Youhe Datong and others fell into operational difficulties.

Youhe Datong Aviation has also negotiated financing and restructuring with many parties, including JD.com, China Merchants Group and other domestic and foreign companies, as well as local governments, and some have even conducted due diligence, but in the end nothing happened. During this period, JD.com also obtained a new air cargo license from the Civil Aviation Administration and established its own air cargo company.

After the outbreak of the COVID-19 pandemic, the air cargo market reversed. At that time, international passenger flights were suspended one after another, and the belly cargo capacity of passenger flights was also sharply reduced. Air transport companies with all-cargo aircraft became the main carriers of necessities during the epidemic, such as medical supplies and masks. Under the imbalance of supply and demand, freight rates rose sharply, and freight prices on many routes doubled.

Youhe Datong Airlines also planned to resume work and production in April 2020, but as the company's financial problems were not resolved, financing negotiations and restructuring with multiple parties failed, and the start-up funds for resumption of flights have not been implemented.

In the end, the company could not escape the fate of having its assets auctioned off. According to data disclosed by the court, the total amount of claims declared by the company's creditors reached 8.321 billion yuan.

Since June this year, the relevant land, real estate and aircraft assets of Youhe Datong Airlines have been auctioned on the JD platform one after another, but the three aircraft have not received any bids after several auctions, and are currently preparing for the third auction.

Behind the money-making of air transport

In this regard, many industry insiders pointed out to reporters that the reason why these aircrafts are not in demand is that they are relatively old and have been unfit for air travel for many years. In fact, many air transport carriers are currently facing the challenge of lack of aircraft, especially large cargo aircraft flying long-distance intercontinental routes. Some companies have begun to use the method of converting passenger aircraft into cargo aircraft, converting some Boeing 777-200 passenger aircraft into cargo aircraft.

The shortage of large cargo planes is closely related to the surge in global air transport demand driven by the explosion of e-commerce. Thomas Hong, director of cargo marketing at Boeing Commercial Airplanes, told reporters that some Chinese e-commerce platforms, including SHEIN and TEMU, can transport 3,000 tons and 2,500 tons of cargo by air every day. In December, the peak shipping season, the volume of shipments from e-commerce platforms will surge further. The four major platforms, TEMU, Alibaba, and Douyin, transport about 10,800 tons of air cargo per day, equivalent to the cargo capacity of 108 777 cargo planes.

"E-commerce is the dark horse in the industry. The rise of Pinduoduo in particular has driven the growth of air freight volume, especially the volume shipped to the European and American markets has increased very rapidly, and the momentum has continued from the second half of last year to the present." Cathay Pacific Mainland Cargo Director He Ying also revealed to reporters.

According to the latest statistics from Flight Steward, in June 2024, my country's civil aviation cargo and mail transport volume was 747,000 tons, a year-on-year increase of 15.5% and a year-on-year increase of 23.1% compared with 2019. Among them, domestic routes (including regions) cargo and mail transport increased by 5.9% year-on-year, and international routes cargo and mail transport increased by 33.7% year-on-year.

This situation also allows air cargo companies to still make good profits after the epidemic. For example, in the first quarter of this year, most domestic passenger airlines were still losing money, but China Eastern Airlines Logistics, which mainly focuses on air cargo and integrated logistics solutions, made a profit of 589 million yuan.

Many industry insiders pointed out to reporters that as global air transport demand is still increasing, air transport capacity is becoming increasingly tight. In addition, affected by the Red Sea crisis, shipping prices have suddenly skyrocketed this year. The demand for shifting from sea to air transport has also begun to gradually emerge. Air freight prices are unlikely to return to pre-epidemic levels, and air freight prices from China are expected to rise further.

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