JPMorgan has released a research report stating that the three major Chinese airlines have issued their first-half performance forecasts, indicating that the net loss for the second quarter of this year will be the most severe in the past three years. JPMorgan's view on the related stocks remains unchanged: it maintains an "underweight" rating on China Eastern Airlines Corporation Limited (HKG: 00670) and China Southern Airlines Company Limited (HKG: 01055); simultaneously, it maintains a "neutral" rating on Air China Limited (HKG: 00753) and Spring Airlines Co., Ltd. (SHA: 601021).
The report notes that after recording a net profit in the first quarter of this year, the three major carriers are expected to post an average net loss of approximately 4.3 billion yuan for the second quarter, the highest quarterly loss since 2023, dragged down by high fuel prices and weak base fares. Summer travel demand has also fallen short of expectations, with both passenger numbers and flight volumes declining year-on-year, while base net fares continue to face pressure, and substitution effects from rail travel continue to intensify. Despite a reduction in fuel surcharges, weak pricing has not stimulated demand, reinforcing a cautious outlook for the sector.
Regarding specific forecasts, Air China is expected to report a net loss of 4.1 billion yuan for the second quarter, compared to a profit of 200 million yuan in the same period last year. China Eastern Airlines and China Southern Airlines are projected to post losses of 3.7 billion yuan and 5.2 billion yuan, respectively, for Q2, representing year-on-year deteriorations of 756% and 562%. Cumulatively for the first half of the year, the three major airlines are expected to report an average net loss of 2.7 billion yuan, with Air China, China Eastern Airlines, and China Southern Airlines forecast to lose 2.4 billion yuan, 2.1 billion yuan, and 3.7 billion yuan, worsening by 30%, 19%, and 143% year-on-year, respectively.
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