China's largest airlines reported a weak third quarter despite the peak travel season as fuel costs surged amid the Middle East conflict, leaving them on course for full-year losses.
China Southern Airlines, China Eastern Airlines and Air China posted net losses for the nine months through September, compared with net profits for the same period in 2025.
As of Monday, all three are expected to post losses for the full year, according to analyst estimates compiled by LSEG.
China Southern late Friday said volatile fuel prices led to a third-quarter net loss of 609 million yuan, equivalent to $91.5 million, a reversal from net profit a year ago.
Fellow state-owned carrier China Eastern Airlines recorded a 98% plunge in quarterly profit to 64 million yuan.
"The increase of jet fuel prices directly drove up the operating costs," according to the airline.
Flag carrier Air China reported similarly downbeat quarterly earnings Thursday, blaming high fuel costs for the 93% drop in net profit.
Despite the deteriorating bottom lines, revenue growth was resilient for the latest quarter. Air China's revenue grew 5.35%, China Eastern's rose 8.2% and China Southern's operating revenue increased 2.3%.
"Peak-season losses expose weak pricing power, with fuller cabins offering little protection against higher fuel prices," DBS Group Research wrote in a note. One solution is to raise total fares, but that could risk the airlines losing passengers to cheaper transportation alternatives such as high-speed rail, it said.
"Capacity is growing too fast for fares to reach profitable levels, leaving the Big Three facing a punishing [fourth quarter]," DBS added.
Shares of China Southern were 2.6% higher in Hong Kong by midday, while China Eastern added about 2% and Air China gained 2.7%. Still, all three stocks have lost about half of their value this year as elevated fuel prices and travel uncertainties due to the Middle East conflict weighed on sentiment for the broader aviation market.
China's civil aviation industry has remained largely subdued this year. The market's passenger volume grew only 2% to 593 million passengers for the first three quarters of 2026, according to data from the Civil Aviation Administration of China.
Passenger volumes for international routes rose 4.7% for the same period, outperforming the 1.7% gain for domestic flights.
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