China's Big Three Airlines Expect First-Half Losses to Widen on Higher Fuel Costs

By Kimberley Kao

China's three largest airlines expect first half losses to widen of the year as elevated fuel prices continue to squeeze profit margins.

While China Southern Airlines, Air China and China Eastern Airlines returned to profit in the first quarter, the recovery is proving short-lived as the Middle East conflict weighs on the bottom line.

Hong Kong-listed shares of the three state-owned carriers have each fallen over 40% since the start of the year.

By comparison, Cathay Pacific shares have gained more than 5%, buoyed by higher passenger volume and strong expectations for premium demand.

Citing "sudden external shocks," China Southern Airlines said late Tuesday that sharp fluctuations in aviation kerosene prices has pressured the industry, driving up fuel costs for the first half of the year.

The carrier expects net losses for the first six months to more than double to between 3.47 billion yuan and 3.97 billion yuan, equivalent to $512.4 million-$586.2 million, compared with a year earlier.

"While the company recorded substantial profits in the first quarter, jet fuel prices stayed elevated due to geopolitical tensions in the Middle East, drastically squeezing profit margins of airline companies," Air China said in a separate filing.

The flag carrier expects losses for the January-June period to widen to between 2.1 billion yuan and 2.6 billion yuan, compared with a loss of 1.81 billion a year earlier.

China Eastern Airlines issued a similarly grim projection, and said it has set up a task force to adjust flight operations, optimize revenue and deploy more fuel-efficient aircraft models to reduce costs. Higher costs have weighed on its operating results, it said.

Shares of Air China, China Southern Airlines and China Eastern Airlines were recently down 1.7%, 3.2% and 3.0%, respectively, in Hong Kong trading on Wednesday.

Write to Kimberley Kao at kimberley.kao@wsj.com

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July 14, 2026 22:33 ET (02:33 GMT)