Understanding the Market | Airline Stocks Fully Rebound, Air China Rises Over 3%, Institutions Optimistic About Airlines' Profit Upward Trend and Potential
Aviation stocks are rebounding, with Air China rising 3.33% to HKD 5.9, China Eastern Airlines up 3.01%, and China Southern Airlines up 2.78%. Air China's net profit in the third quarter decreased by 11% year-on-year, while China Eastern and China Southern increased by 34% and 20%, respectively. Morgan Stanley believes that Air China's poor short-term performance will not affect the outlook on the rising cycle of mainland airlines, expecting that improved business travel demand will support pricing power. Cathay Haitong Securities pointed out that domestic ticket prices have risen year-on-year, business travel is active, and the industry outlook is optimistic
According to Zhitong Finance APP, airline stocks have all rebounded. As of the time of writing, Air China (00753) rose by 3.33% to HKD 5.9; China Eastern Airlines (00670) rose by 3.01% to HKD 4.11; China Southern Airlines (01055) rose by 2.78% to HKD 4.81; Cathay Pacific Airways (00293) rose by 1.26% to HKD 11.21.
In terms of news, recent airline reports for the third quarter show that Air China's net profit attributable to the parent company decreased by 11% year-on-year, while China Eastern's net profit attributable to the parent company increased by 34%, and China Southern's net profit attributable to the parent company increased by 20%. Morgan Stanley previously stated that due to Air China's poor performance in the third quarter and the parent company's suggestion for capital injection, the stock price has declined. However, the firm believes that these two factors will not change its constructive view on the upward cycle of mainland airlines. It still believes that if business travel demand gradually improves, the higher asset utilization of mainland airlines will support their pricing power.
Cathay Haitong Securities pointed out that during recent important domestic meetings, the passenger load factor and domestic ticket prices have maintained a year-on-year increase. Business travel continues the active trend seen in September, estimating that domestic oil-inclusive ticket prices rose by 3-4% year-on-year in October. According to pre-sale observations, the traditional seasonal impact is weaker than in previous years, and the industry is optimistic about the continued improvement in business demand. A-share airline companies are expected to achieve counter-cyclical growth in Q3 2025, exceeding Q3 2019 for three consecutive years, initially demonstrating an upward trend and potential for profitability. The "anti-involution" will ensure reduced losses in the off-season of Q4 and a turnaround for the entire year. The long-term logic of Chinese aviation considers market-oriented ticket pricing, steady growth in demand, and optimization of passenger source structure, which will drive the upward opening of airline profitability in 2026
