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2026-11-05 16:10:22 During the peak travel season in 3Q, the quarterly profits of China's top three airlines nearly evaporated due to a surge in fuel costs and weak pricing power, offsetting the resilience in passenger load factors, HSBC Global Investment Research said in a research report. Revenue of the three major airlines grew 2-8% YoY last quarter, but ex-factory prices of aviation kerosene in China surged 42% YoY, leading to a 14-18% increase in opex. All three airlines recorded operating losses. AIR CHINA (00753.HK) posted a loss of RMB1.5 billion last quarter, while CHINA EAST AIR (00670.HK) and CHINA SOUTH AIR (01055.HK) recorded operating losses of RMB700 million and RMB300 million, respectively. HSBC Global Investment Research said October data weakened and expected the operating environment to remain under pressure in 4Q amid high oil prices and softer demand. It accordingly lowered earnings forecasts and estimated the three major airlines would record a combined loss of about RMB11.7 billion in 4Q26 and a combined loss of RMB11.9 billion in 2H26. The broker downgraded CHINA SOUTH AIR from Hold to Reduce, chopping its TP by 31% from HKD3.2 to HKD2.2. It maintained Reduce on CHINA EAST AIR and Hold on AIR CHINA (00753.HK), with TPs unchanged at HKD2 and HKD4, respectively. The broker was relatively more positive on CATHAY PAC AIR (00293.HK), assigning a Buy rating with a TP of HKD16. ~ AASTOCKS Financial News Website: www.aastocks.com | |