Little Impact From U.S. Flights Suspension, Omicron Uncertainty Weighs More

We see little impact to the three Chinese airlines, namely Air China, China Southern Airlines and China Eastern Airlines, from the U.S. action to suspend U.S. flights by Chinese carriers. The three airlines have been operating at 4%-7% of precoronavirus international seat capacity in the last quarter of 2021. Given that we have not factored in any big improvements in first-quarter 2022, the additional seat capacity cut only reduces our full-year international capacity forecast by about 1%. Our long-term view and fair value estimates are unchanged. All three airlines are trading around or above our fair value estimates. We suggest investors wait for better entry points and prefer narrow-moat Trip.com as a more attractive alternative for China travel recovery.