GF Securities released a research report stating that as domestic airlines successively issued their 2025 annual performance forecasts, from an annual perspective, Air China and China Eastern Airlines remain in a loss-making position, although China Eastern's loss has narrowed significantly. China Southern Airlines and Hainan Airlines Holdings have achieved a turnaround to profitability, becoming the core contributors to the sector's profit recovery. On a quarterly basis, the fourth quarter of 2025 saw the industry generally under pressure, still predominantly recording losses, but most airlines showed significant year-on-year improvement, reflecting that the recovery trend continues despite off-season profitability pressures. Looking ahead, against a backdrop of restrained supply, average airfares demonstrate resilience, and the characteristics of "peak seasons being stronger and off-seasons more stable" may further intensify. The main views of GF Securities are as follows: The 2025 performance forecasts for airlines overall present the characteristics of "significant loss convergence, some airlines turning profitable first, and accelerated realization of profit divergence."
On January 29 and 30, 2026, China Express Airlines, Air China, China Eastern Airlines, China Southern Airlines, and Hainan Airlines Holdings successively released their 2025 performance forecasts. From an annual perspective, Air China and China Eastern Airlines remain in a loss-making position, with China Eastern's loss narrowing notably. China Southern Airlines and Hainan Airlines Holdings achieved a turnaround to profitability, serving as the core contributors to the sector's profit recovery. China Express Airlines continued its profit growth, reflecting the relative advantages of regional routes and operational flexibility. Quarterly data shows that while the industry generally faced pressure and remained loss-making in Q4 2025, most airlines showed marked improvement year-on-year, indicating the persistence of the recovery trend despite off-season profit challenges.
The 2025 performance forecasts for the three major state-owned airlines were largely in line with market expectations, continuing the main theme of "loss convergence and ongoing recovery." Air China's performance was relatively slightly below expectations, potentially mainly due to its aircraft daily utilization rate recovering at a slower pace compared to the other major airlines and drag from business route performance in the Beijing market. China Eastern Airlines' results were generally in line with expectations, indicating it is on a recovery path. Notably, the year-end profits of both Air China and China Eastern Airlines were affected by accounting treatment factors: both companies conducted prudent reassessments of their deferred tax assets at the balance sheet date and made corresponding adjustments, creating a one-time drag on current profits, which was also a significant reason for the full-year losses.
China Southern Airlines performed relatively better; besides the continuous recovery of its main business operations, increased profit contributions from its logistics arm also effectively supported the company's overall performance. The 2025 performance forecasts for Hainan Airlines Holdings and China Express Airlines overall confirmed profit growth, presenting a resonance pattern of "operational recovery + release of profit elasticity." Among them, Hainan Airlines Holdings expects its 2025 net profit attributable to shareholders to be between 1.8 and 2.2 billion yuan, and its non-GAAP net profit to be between 900 million and 1.1 billion yuan. While operational improvements were driven by demand recovery and enhancements in route network quality and efficiency, the company significantly benefited from substantial gains on foreign exchange due to RMB appreciation under its foreign currency liability structure. The certainty and elasticity of its earnings recovery are both evident. China Express Airlines expects its 2025 net profit attributable to shareholders to be between 500 and 700 million yuan, primarily relying on the recovery of demand in regional markets, optimizing its regional network structure, and strengthening trunk-feeder connections to boost flight volume and load factors, thereby achieving sustained profit growth.
Looking ahead, demand remains the core variable for industry-wide fare recovery and profit improvement. Supported by the normalization of resident travel consumption, an increasing proportion of leisure tourism, and refined airline revenue management, domestic passenger traffic is expected to experience moderate growth. With supply remaining restrained, average fare levels are expected to show resilience, and the trend of "stronger peak seasons and more stable off-seasons" is likely to intensify. Although international routes face periodic fluctuations due to external uncertainties, the medium- to long-term trends of expanding visa-waiver policies, progressing inbound/outbound travel facilitation, and the gradual recovery of high-yield, long-haul routes remain unchanged. Meanwhile, supply and cost constraints are expected to amplify profit elasticity: slower aircraft deliveries will maintain restrained capacity expansion, coupled with the strengthening of "anti-involution" policy guidance, which will curb disorderly competition and stabilize revenue quality. On the cost side, if oil prices remain low and volatile and the RMB stays relatively strong, combined with optimized fleet and route structures and refined cost control leading to lower unit costs, the momentum for industry profit improvement is expected to continue.
In terms of stock picks, the top recommendations are Hainan Airlines Holdings (600221.SH) and China Express Airlines (002928.SZ). Also worth monitoring are Air China (601111.SH, 00753), Juneyao Airlines (603885.SH), and Spring Airlines (601021.SH). Risks include significant economic fluctuations, geopolitical conflicts, business growth falling short of expectations, and major policy changes.