Airlines stocks showed a broad recovery, with AIR CHINA (00753) rising 3.33% to HK$5.9 by the time of writing. Other carriers also gained: China Eastern Airlines (00670) climbed 3.01% to HK$4.11, China Southern Airlines (01055) advanced 2.78% to HK$4.81, and Cathay Pacific (00293) edged up 1.26% to HK$11.21.

The sector's rebound follows recent Q3 earnings reports from airlines and airports. Among them, AIR CHINA's net profit attributable to shareholders fell 11% YoY, while China Eastern Airlines and China Southern Airlines posted YoY increases of 34% and 20%, respectively.

Morgan Stanley noted that AIR CHINA's weaker Q3 performance and its parent company's proposed capital injection had weighed on the stock. However, the bank maintains a constructive outlook on the mainland airline sector's upward cycle, citing potential pricing power supported by higher asset utilization if business travel demand gradually recovers.

Cathay Securities highlighted that domestic passenger load factors and ticket prices remained higher YoY during recent key conferences, with corporate and business travel sustaining September's momentum. Estimates suggest October's domestic fuel-inclusive fares rose 3-4% YoY. Industry observers expect corporate demand to remain robust, with seasonal transition effects weaker than in previous years.

Mainland A-share airlines delivered resilient Q3 2025 earnings, surpassing 2019 Q3 levels for the third consecutive year, signaling an emerging profit growth trend. Measures to curb excessive competition are expected to mitigate Q4 seasonal losses and support full-year breakeven.

With long-term fundamentals intact—including fare marketization, steady demand growth, and optimized passenger mix—analysts project airline profitability to enter an upward trajectory by 2026.