Airline stocks surged collectively during trading. As of press time, AIR CHINA (00753) gained 5.22% to HK$5.24; CHINA SOUTH AIR (01055) rose 4.03% to HK$3.87; CHINA EAST AIR (00670) climbed 3.78% to HK$3.02.
On the news front, Shenwan Hongyuan Securities believes that under changing conditions such as constrained aviation supply chain recovery and improved wide-body aircraft utilization rates, the aviation supply logic has been verified from multiple aspects. With fundamentals bottoming out combined with expectations of positive changes in oil prices and foreign exchange rates ahead, the sector possesses allocation value. From this year's market supply-demand structure perspective, market supply growth remains limited, and the core logic of natural passenger volume growth remains unchanged. If domestic airlines' ticket prices warm up subsequently, it will continue to validate the logic supporting airline revenue improvements. The firm continues to recommend attention to the aviation sector, as supply slowdown certainty is strong, demand side has elasticity, and with external oil and foreign exchange cooperation, airlines can release significant performance improvement potential.
Guotai Haitong Securities pointed out that with the summer travel season concluding, the firm estimates passenger traffic grew over 3% year-over-year, load factor improved by approximately 1 percentage point year-over-year, while unexpectedly weak business and official demand caused domestic fuel-inclusive ticket prices to decline about 3-4% year-over-year. After major events in early September, civil aviation market volume and prices began recovering, with Beijing market showing the most obvious recovery. Considering the impact of major conferences in October, business and official travel is expected to recover in mid-to-late September.
The industry is expected to continue reducing losses in the first half of 2025, with Q2 showing narrowed year-over-year declines in major airlines' seat revenue, while most fuel cost reductions during the off-season were retained, significantly reducing losses year-over-year. The firm expects substantial profits in Q3 2025 peak season, with Q4 anti-price war measures potentially helping reduce losses, leading to industry-wide turnaround for the full year.