GTHT has reiterated its overweight rating on airlines and oil shipping sectors. The firm projects significant loss reductions in Q4 2025 for airlines, with full-year profitability expected. Despite fluctuations in Japan routes, long-term growth logic remains intact, with fleet expansion likely to stay subdued during the "15th Five-Year Plan" period. Rising demand is anticipated to sustainably drive ticket prices and earnings, suggesting contrarian bets on a "super cycle."
For oil shipping, spot rates remain elevated despite minor corrections. The Russia-Ukraine peace talks are expected to have limited impact, with GTHT forecasting stronger-than-expected market uptrends. Key insights include:
**Airlines**: - Q4 2025 losses are set to narrow sharply, with annual breakeven achievable. Seasonal November disruptions were milder than usual, with passenger traffic up 6% YoY (domestic +5%, international +18%). Load factors hit record highs, rising 3–4 percentage points YoY, while domestic fuel-inclusive fares edged up 1–2%, and international fares surged. - December jet fuel prices rose 4% YoY—the first annual increase—prompting a hike in domestic long-haul fuel surcharges from CNY 20 to 40, offsetting cost pressures. - Recent cuts in Japan routes may redirect capacity to Southeast Asia and domestic markets, but the overall 2025 impact is deemed limited. - A "super cycle" is emerging, fueled by fare deregulation, steady demand growth, and optimized passenger mix, which should lift sustainable earnings.
**Oil Shipping**: - VLCC spot rates (Middle East-China) dipped slightly to $120,000/day but stayed high, with Q4 2025 profits poised for a decade peak. Shipowners’ pricing discipline countered charterers’ attempts to suppress rates. - Crude tanker earnings in 2025 are projected to hit a 10-year high, though short-term rate volatility may persist due to shipment pacing and seasonal lulls. - Global crude output growth and aging fleets will likely tighten compliant vessel supply, sustaining an upward rate trajectory. Russia-Ukraine negotiations are seen as having marginal influence.
**Outlook**: Airlines’ "15th Five-Year Plan" will see fleet growth slow to sub-3% CAGR, down from double digits, constrained by reduced capex and aircraft supply bottlenecks. Pratt & Whitney’s engine recalls (since September 2023) initially disrupted operations, but carriers adapted by trimming off-peak flights. Despite expanded repair capacity in 2024, 2025 may see broader grounding impacts during peak seasons. However, GTHT expects diminishing disruptions over the next two years, preserving slot scarcity.
**Strategy**: 1) **Airlines**: A super cycle beckons, with record load factors and low fares poised to rise amid supply constraints. 2) **Oil Shipping**: Geopolitical risks are muted; further upside to rates is anticipated.
**Risks**: Economic shifts, tariffs, geopolitics, oil/currency volatility, and safety incidents.
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