Mainland China and HK Airlines Back to square one

Research evidence excerpt

Mainland China and HK Airlines Back to square one

26 June 2026

Mainland China and HK Airlines Equities Aviation

Back to square one China

◆ Jet fuel has corrected 54% from its war peak, albeit still 29%

above pre-war, but this lifts prospects of lower losses in 2H Parash Jain*

Global Head of Transport & Logistics Research

◆ Soft traffic in the short-term, but falling fuel surcharges and The Hongkong and Shanghai Banking Corporation Limited

parashjain@hsbc.com.hk

summer peak should support rebound in demand +852 2996 6717

◆ Upgrade to Hold, from Reduce, for the Big 3 after 35‑38% H- DeepakAnalyst,Maurya*,Asia TransportCFA

share price decline in the past six months; prefer CX over Big 3 The Hongkong and Shanghai Banking Corporation Limited deepakmaurya@hsbc.com.hk

+852 2822 4292

Fall in fuel prices is the dominant catalyst: The US/Iran de-escalation has

Bruce Chu*, CFA

triggered a dramatic fall in oil prices, with jet fuel declining 54% from its conflict peak Analyst, Asia Transport

to cUSD110/bbl, despite 29% above the Jan-Feb (pre-war) average. For airlines The Hongkong and Shanghai Banking Corporation Limited

bruce.y.h.chu@hsbc.com.hk

where fuel typically accounts for 30-35% of operating costs, this swing fundamentally +852 2996 6621

reshapes the profit trajectory for the rest of the year and offsets the persistent

Cathy Huang*, CFA

operational headwinds that have kept us cautious over the past quarters. Associate, Asia Transport

The Hongkong and Shanghai Banking Corporation Limited

Demand: short-term soft, but fuel-led recovery ahead: The latest traffic data cathy.m.y.huang@hsbc.com.hk

remains subdued – in week 25 (15‑21 June) total flights declined 5.4% y‑o‑y +852 2996 4506

(domestic -5.8%) and passenger volume was also down 5.4%, while load factor Kevin Li*