High oil prices continue to erode airline profits. Recently, the third-quarter 2026 reports of seven A-share listed airlines were fully disclosed. A review of the financial reports of the three major state-owned aviation groups — Air China Limited (ASX: 601111.SH), China Eastern Airlines Corporation Limited (ASX: 600115.SH), and China Southern Airlines Company Limited (ASX: 600029.SH) — as well as four private carriers, Hainan Airlines Holding Co.,Ltd. (ASX: 600221.SH), Spring Airlines Co.,Ltd. (ASX: 601021.SH), Juneyao Airlines Co.,Ltd. (ASX: 603885.SH), and China Express Airlines Co.,Ltd. (ASX: 002928.SZ), shows that in the first three quarters of this year, the seven airlines together generated operating revenue of approximately RMB 505.032 billion, up about 8% year on year, yet all faced pressure on net profit.
Among them, the three major airlines each reported operating revenue exceeding RMB 100 billion in the first three quarters, setting record highs, but all swung from profit to loss on a year-on-year basis in terms of profitability. The four private carriers all remained profitable in the first three quarters, but each saw profit decline by double digits.
Looking at the third quarter alone, as the traditional peak season for air travel, the summer travel surge failed to reverse the downward trend in airline profits. Among the seven carriers, only China Southern Airlines posted a loss, while Spring Airlines delivered the strongest profitability. All seven airlines cited rising jet fuel prices as a factor affecting their operating performance in their financial reports.
Three Major Airlines Swing from Profit to Loss in First Three Quarters; Only China Southern Posts a Loss in the Quarter
In terms of revenue scale, the three major airlines account for the dominant share of domestic listed carriers, with combined operating revenue of RMB 405.241 billion, up 8.38% year on year, all reaching record highs for the same period. Specifically, in the first three quarters of this year, China Southern Airlines led the seven carriers with operating revenue of RMB 147.212 billion, up 6.93% year on year; Air China reported revenue of RMB 140.963 billion, up 8.58% year on year; China Eastern Airlines reported revenue of RMB 117.066 billion, up 10.01% year on year, the highest growth rate among the three major carriers.
In terms of profit, all three major airlines swung from profit to loss in the first three quarters. Among them, China Southern Airlines recorded the largest loss, with a net loss attributable to shareholders of RMB 4.305 billion; China Eastern Airlines posted a net loss attributable to shareholders of RMB 2.115 billion; Air China reported a net loss attributable to shareholders of RMB 2.015 billion.
It is worth noting that even entering the traditional summer travel peak season, the three major airlines' profitability in the third quarter still fell sharply compared with the same period last year. Air China reported net profit attributable to shareholders of RMB 271 million, down 92.64% year on year; China Eastern Airlines reported net profit attributable to shareholders of RMB 64 million, down 98.19% year on year. China Southern Airlines posted a quarterly loss, with a net loss attributable to shareholders of RMB 609 million, compared with a profit in the same period last year.
Regarding the changes in performance, all three major airlines listed rising jet fuel costs as an important reason. Air China stated in its third-quarter report that the company actively responded to the new normal of industry development, accelerated the improvement of core business operating quality and efficiency, and deepened efforts to enhance quality and efficiency, but due to the rapid rise in oil prices, the company's jet fuel costs increased substantially, causing profit indicators to fluctuate significantly year on year. China Eastern Airlines pointed out that continued tensions in the Middle East geopolitical situation drove international crude oil prices to oscillate at high levels, and jet fuel prices rose sharply accordingly. As one of the company's most important operating costs, the upward trend in jet fuel prices directly pushed up operating costs, leading to a relatively large decline in operating performance and other financial indicators. China Southern Airlines similarly stated that impacted by oil price fluctuations, the company incurred an operating loss.
Against the backdrop of the summer travel peak season and continued expansion of international routes, why did China Southern Airlines become the only loss-making carrier among the three major airlines? Han Wensheng, Vice Chairman and General Manager of China Southern Airlines, said at the third-quarter earnings briefing that in the third quarter, China Southern's passenger volume growth exceeded capacity input growth, and the load factor improved year on year, indicating a good match between supply and demand. However, jet fuel prices continued to run at high levels, and high-speed rail diverted travel demand in the central China market, which had a relatively large impact on China Southern. Next, China Southern will adhere to implementing its hub network strategy, continuously optimize its route network structure, and steadily improve yield levels.
Demand is still recovering, but jet fuel prices on the cost side have become the most obvious source of pressure on airline income statements in the first half of this year. Jet fuel cost is one of the largest operating costs for airlines, and its price fluctuations have a major impact on airline profitability. According to earlier calculations, the three major airlines' combined jet fuel costs in the first half of the year exceeded RMB 96.8 billion, with jet fuel costs alone equivalent to about 37.5% of revenue for the same period, and the proportion of jet fuel costs in total costs is also rising rapidly. Previously, the International Air Transport Association also projected that due to high oil prices and other factors, global airlines' total net profit in 2026 would be about USD 23 billion, only half of the net profit in 2025, with a net profit margin of 2.0%.
Four Private Airlines See Sharp Profit Declines; Spring Airlines Most Profitable
Compared with the three major airlines, the four private carriers remained profitable in the first three quarters, but their profit performance was also clearly differentiated. In terms of revenue scale, Hainan Airlines Holding ranked first among the four private carriers, with revenue of RMB 55.732 billion in the first three quarters, up 4.29% year on year; Spring Airlines reported revenue of RMB 19.353 billion, up 15.38% year on year, the fastest growth rate among the seven listed airlines; Juneyao Airlines reported revenue of RMB 18.854 billion, up 7.86% year on year; China Express Airlines reported revenue of RMB 5.853 billion, up 2.07% year on year.
In the first three quarters, Hainan Airlines Holding reported net profit attributable to shareholders of RMB 820 million, down more than 70% year on year; third-quarter net profit attributable to shareholders was RMB 550 million, down more than 80% year on year. Hainan Airlines stated that affected by geopolitical conflicts and other factors, international crude oil prices rose sharply, pushing up jet fuel costs and causing operating efficiency to decline year on year.
In terms of profit scale, Spring Airlines continued to lead the seven listed airlines. In the first three quarters of this year, Spring Airlines reported net profit attributable to shareholders of RMB 1.843 billion, down 21.08% year on year, the smallest decline. In the third quarter, Spring Airlines reported net profit attributable to shareholders of RMB 801 million, a decline of about 30%, also the smallest decline among the seven carriers. Spring Airlines stated in its financial report that the year-on-year decline in total profit, net profit attributable to shareholders, and other indicators in the third quarter was mainly due to the sharp rise in jet fuel prices during the reporting period, which led to a decline in gross margin.
Juneyao Airlines reported net profit attributable to shareholders of RMB 327 million in the first three quarters, down nearly 70% year on year; third-quarter net profit attributable to shareholders was RMB 177 million, down nearly 70% year on year. Juneyao Airlines stated in its financial report that affected by changes in the international energy market, jet fuel prices rose sharply year on year, significantly increasing core operating costs and causing major profit indicators to decline year on year.
China Express Airlines reported net profit attributable to shareholders of RMB 125 million in the first three quarters, down nearly 80% year on year; third-quarter net profit attributable to shareholders was RMB 82 million, down more than 77% year on year. China Express Airlines pointed out in its financial report that affected by Middle East geopolitical conflicts, international oil prices continued to run at high levels, significantly increasing the company's jet fuel costs.
Traffic Growth Fails to Offset High Oil Price Impact; Airline Profitability Still Under Test
In terms of passenger operating indicators, among the seven carriers, Air China, China Eastern Airlines, Hainan Airlines Holding, Spring Airlines, and Juneyao Airlines all saw year-on-year increases in load factor in the first three quarters, while China Southern Airlines and China Express Airlines saw declines. At the same time, passenger turnover performance varied among the carriers. Spring Airlines' revenue passenger kilometers in the first three quarters increased 15.12% year on year, the highest growth among the seven carriers, while Hainan Airlines Holding and China Express Airlines saw year-on-year declines of 0.23% and 3.10%, respectively.
Typically, revenue passenger kilometers reflect an airline's passenger transport turnover scale, and load factor reflects capacity utilization, while actual profitability is also affected by ticket yield levels, fuel prices, and other operating costs. Discussing the company's domestic route fare levels and load factor performance this year, Xiao Feng, Board Secretary of Air China, said at the third-quarter earnings briefing that the domestic market has seen volume growth with price declines this year, and involution remains, and against the backdrop of relatively rapid industry supply recovery, the company will continue to adhere to its higher fare strategy unchanged and strive for an overall improvement in industry yield levels. Regarding the company's yield level in the off-season after the October holiday, Xiao Feng responded at the earnings briefing that as of now the company's yield level is acceptable. The company is cautiously optimistic about supply-demand and volume-price performance for next year's Spring Festival travel rush.
Judging from the reasons for performance changes disclosed by the seven carriers, high oil prices were the common factor affecting operating efficiency in the first three quarters. For airlines with large fleet sizes and extensive route networks, the cost pressure brought by rising jet fuel prices is particularly evident. As the traditional off-season for air transport arrives in the fourth quarter, whether airlines can convert passenger traffic growth into improved profitability will still depend on the combined changes in air transport demand, fare levels, and jet fuel costs.
Li Haoying, Operations Head of the CAAC official direct sales platform Umetrip, said that overall, the civil aviation market in the third quarter showed distinct characteristics of "steady overall growth and deep integration of aviation and cultural tourism." Driven by the dividends of visa-free policies, the overseas popularity of "ChinaCool," and demand for escaping extreme heat in Europe, inbound tourism became a highlight of the third quarter. Entering the fourth quarter, civil aviation enters the winter-spring flight season, and passenger travel structure shows new characteristics, forming a two-way flow pattern of "ice and snow tourism heading north, warm-weather escapes heading south": destinations such as Harbin, Shenyang, Dalian, Yanji, and Altay are gaining popularity, while bookings for warm-winter cities such as Sanya, Haikou, and Kunming are growing steadily.
According to the China Air Transport Association's third-quarter 2026 information briefing, overall, civil aviation operations in the third quarter continued to maintain a safe and steady development trend. Although affected by multiple factors such as ongoing geopolitical conflicts, high international oil prices, fierce market competition, and differentiation in passenger structure, industry operating costs remain at high levels, the entire industry has proactively adjusted business strategies and deepened quality and efficiency improvements, steadily enhancing endogenous development momentum and risk resistance. Looking ahead to the fourth quarter, the China Air Transport Association noted in its briefing analysis that on the passenger side, as inbound tourism dividends accelerate and travel demand such as ice and snow tourism increases in a concentrated manner, civil aviation passenger flow will usher in important incremental growth, requiring further innovation in service supply and deeper exploration of new passenger flow growth points; on the cargo side, the fourth quarter will welcome the cargo peak season, and driven by overseas demand, cargo freight rates are expected to spike periodically. At the same time, however, it should be noted that industry development still faces challenges. International oil prices remain high, the external environment is complex and intertwined, and winter operating pressure is increasing, which not only squeezes airline profit margins but also brings challenges to safe industry operations. In response, the China Air Transport Association recommends that all parties work together to address high oil prices, take multiple measures to ease the pressure from severe oil price fluctuations; jointly strengthen major risk prevention, improve industry consultation, information sharing, and emergency coordination mechanisms, enhance forward-looking analysis and forecasting of various risks, and effectively reduce the impact and disruption brought by external uncertainties; and jointly deepen market governance to promote sound and sustainable industry development.
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