Chinese Airline Sector Monthly: Q3 earnings may turn profitable

Research evidence excerpt

Chinese Airline Sector Monthly: Q3 earnings may turn profitable

Global Research

26 June 2026ab

Chinese Airline Sector Monthly Equities

ChinaQ3 earnings may turn profitable

Airlines

Xin Chen

May data: High airfares weighed on domestic demand, int'l performed well Analyst

According to CAAC and Flight Master, in May, the industry’s average domestic airfare xin.chen@ubs.com

(including fuel surcharges) was c.Rmb869 (+16% YoY and 22% higher than in March) +86-21-3866 8864

vs. domestic RPK -6% YoY (+14% YoY in March), suggesting that elevated airfares Beini Du

continued to weigh on domestic demand. On the international side, performance was Associate

supported by new routes and increased flight frequencies. Additionally, following the S1460525090002

onset of the Middle East conflict, more European passengers have shifted to Chinese betty-za.du@ubs.com

airlines for EU-Asia trips. We estimate that in May, the share of international transfer +86-213-866 8753

passengers at SH Airport has risen to 40%, with international RPK +6% YoY, and CA Jarrod Castle, CFA

and CEA both recording YoY growth of over 9%. We also estimate that passenger load Analyst

factor (PLF) exceeded 85% on both domestic and international routes, as industry jarrod.castle@ubs.com

supply contraction continued to support elevated load levels. International cargo +44-20-7568 8883

delivered a better performance, with international RFTK up 13.6% YoY in May, broadly

in line with March and showing no meaningful impact from the Middle East conflict or

high oil prices.

Q2 earnings: Passenger may see substantial losses, cargo may slightly rise YoY

The negative cost impact from higher oil prices is difficult to fully pass through to

consumers via higher ticket prices and fuel surcharges, especially in the currently weak