Chinese Airline Sector: Virtual tour takeaways: insights from domestic airlines expert

研报英文原文证据摘录

Chinese Airline Sector: Virtual tour takeaways: insights from domestic airlines expert

Global Research

13 July 2026ab

First Read

EquitiesChinese Airline Sector

Virtual tour takeaways: insights from domestic China

airlines expert Airlines

Xin Chen

Analyst

xin.chen@ubs.com

Pressure persists, while International remains resilient +86-21-3866 8864

We invited an industry expert from domestic airlines to participate in our virtual tour. The Beini Du

key takeaways are as follows：1) 2Q losses could exceed those typically seen in 4Q, with Associate

leading carriers potentially offsetting 2Q losses with earnings generated in 1Q and 3Q, S1460525090002

while smaller private airlines may face greater challenges; 2) Q3 profit is unlikely to betty-za.du@ubs.com

surpass last year's level. Traffic and airfares both tracking below prior-year levels in first +86-213-866 8753

week of July. 3) International routes remain relatively resilient overall, with Japan, Korea Jarrod Castle, CFA

and Europe routes continuing to deliver healthy route economics despite higher fuel Analyst

costs. jarrod.castle@ubs.com

+44-20-7568 8883

2Q losses to peak; summer demand off to a soft start

1) Q2: The expert expects 2Q26 losses to potentially exceed 4Q. Both traffic and airfares

came in below expectations. In response to higher fuel costs, airlines proactively

trimmed capacity on underperforming routes, reducing flights by roughly 10%. Expert

thinks the weak demand was attributed to both higher fuel surcharges and lackluster

consumption. Leisure travellers now account for a larger proportion of demand while

they are more price-sensitive than business travellers. 2) Q3: The expert believes 3Q26

earnings are unlikely to exceed 3Q25 levels at current fuel prices. Performance is

expected to diverge.