Chinese airlines are entering the strongest supply-demand dynamics in over a decade, with aircraft delivery shortages limiting capacity growth to around 3-4% in 2026-27, according to JPMorgan's research report. The industry's load factor reached a historical high in 4Q25.However, the war between Iran and the US has become the dominant short-term risk. Brent crude oil has surged by about 50% to USD115 per barrel, still Chinese airlines have no hedging in place, even though fuel accounts for about one-third of operating costs.Related News CHINA SOUTHERN AIRLINES (01055.HK) Achieves RMB855 Million Net Profit for Full Year, Turns Loss into ProfitJPMorgan's base case scenario forecasts oil prices at USD80 per barrel for 2026-27, which would lead the three major Chinese airlines to record losses or near break-even in 2026.As industry stock prices have adjusted by about 30% due to geopolitical tensions, JPMorgan maintains a cautious outlook until the oil price outlook becomes clearer.The broker has upgraded AIR CHINA (00753.HK) -0.190 (-3.808%) Short selling $27.03M; Ratio 47.055% 's rating from Underweight to Neutral and raised its target price from HKD4.5 to HKD4.8. CHINA EAST AIR (00670.HK) -0.190 (-4.859%) Short selling $30.52M; Ratio 50.072% has been downgraded from Neutral to Underweight, alongside a target price lowered from HKD3 to HKD2.7. CHINA SOUTH AIR (01055.HK) -0.180 (-4.255%) Short selling $14.13M; Ratio 45.958% has been rated as Underweight, and its target price has dropped from HKD2.9 to HKD2.8.(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-04-02 16:25.)
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