China's airlines have lost more than US$40m during the first five months of this year due to rising jet fuel costs and operational inefficiencies. One of China's largest carriers, China Southern Airlines, saw its share price crash 19% on the Hong Kong market in mid-July, after news broke that its parent company, China Southern Airlines Group, had lost its US$130m investment in Hantang Securities when the troubled securities firm was shut down by regulators in June.
Adding to the industry's headache is the massive pilot shortage it faces. To man its ever growing fleet of aircraft, China has needed some 1,200 new pilots each year since 2000, but China's one domestic flight school graduates only 600 pilots a year, according to the International Herald Tribune. In turn, Chinese airlines are forced to break national regulations prohibiting the hiring of foreign pilots, as some of the smaller carriers have allegedly hired more than a collective total of 100 foreign pilots.
Pilot shortages notwithstanding, China's carriers are still seeking to increase their fleets, as Airbus has been in talks to supply A380s, its biggest aircraft, to some of China's top carriers, including Air China, China Eastern and Hainan Airlines.
Airbus could be getting a boost from Washington, as its rival, Boeing, is mired in regulatory mud for allegedly failing to get export licenses for some microchips with military applications used in 96 jets it sold to China and other countries between 2000 and 2003, as reported by the Seattle Times. The US government could sue Boeing for up to US$47m if the aviation company is found guilty of violating the Arms Control Act, according to the report.