Qantas Airways today surprised the market with a stronger-than-expected profit forecast that underscored how Asian airlines are recovering from the pandemic at vastly different paces as demand rebounds.
Carriers that benefited from strong external funding or government support, earlier openings, large domestic markets and surging cargo rates are thriving.
But those with longer-lasting quarantine rules, weaker balance sheets and more aircraft in storage are struggling to gain ground as the economic outlook darkens.
Qantas saw shares surge 9% for the day after it revealed results in the first half ending December 31 would reach as much as A$1.3 billion ($815.75m), more than double market expectations.
It noted that consumers are willing to pay higher fares despite rising inflation and interest rates.
"There is still a massive amount of pent-up demand," Qantas chief executive Alan Joyce told analysts, adding that the airline predicts there will be less supply for several years, particularly internationally.
International rivals have been slower to bring back long-haul capacity and the stronger US dollar makes it less attractive for carriers from the US and Middle East, in a trend that also helped Air New Zealand to get back in the black this half.
Singapore Airlines has also reaped rewards from its fully opening its borders in April, strong financial support from government-owned investment arm Temasek Holdings as well as its hub position.
"Given the supply-demand imbalance, air fares and yields have been very high, leading to a return of profitability for those airlines that have been able to bring back a significant amount of capacity," Singapore analyst Brendan Sobie said.
This phenomenon, however, could be temporary, with airline profits at risk next year amid weakening demand while capacity rebounds as lagging carriers bring more planes into service, he added.
Joyce declined to provide second-half guidance for Qantas, though he said international fares were likely to weaken from current levels.
Qantas had suffered from a rise in delays, cancellations, lost baggage and staffing issues this year.
It said it would invest A$200m in the first half for additional crew, training of new recruits and keeping aircraft in reserve to reduce delays and cancellations.
In North Asia, airlines have suffered from a lack of customers, though the outlook is improving as Hong Kong, Taiwan, Japan and South Korea ease quarantine and testing rules.
Taiwan's China Airlines and Korean Air Lines remained profitable through much of the pandemic on the back of a surge in cargo rates. The freight market is starting to weaken, but rising passenger numbers will help make up for that lost revenue.
Japan Airlines and ANA Holdings will benefit from the country's opening to visa-free tourist travel this week, with a weak yen making it an attractive destination for overseas visitors.
Airlines in the region's largest market, mainland China, have posted deepening losses this year because of the country's zero-Covid policy, which has led to a huge slump in international travel and periodic domestic lockdowns.
Hong Kong's Cathay Pacific Airways, which parked much of its fleet in the desert during the pandemic because of a lack of demand, is struggling to hire enough staff and bring planes back quickly as rules ease.
Malaysia's AirAsia, which has a relatively weak balance sheet, is facing a shortage of maintenance slots as it works to return its fleet to service.
Other Southeast Asian carriers like Garuda Indonesia and Thai Airways International have cut the size of their fleets as they restructure debt, making it harder to grow in line with rebounding demand.
