China Eastern Airlines Corp Ltd

China's three largest state-owned airlines—Air China, China Eastern Airlines, and China Southern Airlines—posted a combined net loss of 8.2 billion yuan in the first half of 2026, marking their seventh consecutive year of losses, due to higher jet fuel costs. Air China lost 2.3 billion yuan, China Eastern lost 2.2 billion yuan, and China Southern lost 3.7 billion yuan. The first-half loss reversed a profitable first quarter, when the three airlines together earned 4.82 billion yuan, boosted by travel demand during the Chinese New Year holiday. Profits were pressured by disrupted international routes and a 35-38% increase in jet fuel costs amid Middle East conflicts. Meanwhile, revenue for all three airlines grew 9.7-11.1% on strong international travel demand, particularly on European routes, as some passengers avoided Middle East hubs affected by the Iran war. Weak economic conditions and competition from high-speed rail limited the airlines' ability to raise fares. Although jet fuel prices have fallen from their second-quarter peak, they remain more than 50% above pre-war levels.

China Eastern Airlines released its 2026 interim report. The company's total operating revenue was 74.234 billion yuan, up 11.09% year on year, but net profit attributable to the parent was negative 2.179 billion yuan, a decrease of 748 million yuan compared with the same period last year, widening the loss. Net cash inflow from operating activities was 10.697 billion yuan, down 14.74% year on year. The asset-liability ratio rose to 87.67%, gross margin fell to 0.04%, return on equity was negative 6.15%, and diluted earnings per share was negative 0.11 yuan. The company had 178,200 shareholders, and the top ten shareholders held 78.86% of total share capital.

China Eastern Airlines disclosed its half-year report on August 30. In the first half of 2026, the company achieved operating revenue of 74.234 billion yuan, up 11.09 percent year on year. However, net loss attributable to shareholders of the listed company was 2.179 billion yuan, compared with a loss of 1.431 billion yuan in the same period last year, widening the loss year on year.

Airports Council International World has released its 2026 World Airport Traffic Dataset, showing that global air passenger numbers reached 9.8 billion in 2025, up 3.7 percent year on year. Chinese airports performed strongly, with Shanghai Pudong International Airport jumping from tenth to fifth place, Guangzhou Baiyun International Airport returning to ninth, Beijing Capital International Airport rising one spot to fifteenth, and Shenzhen Bao'an International Airport climbing from twenty-second to nineteenth. In cargo, global air freight volume exceeded 131 million tonnes in 2025, up 3.3 percent year on year. China accounted for five of the top twenty airports, with Hong Kong International Airport leading at 5.1 million tonnes and Shanghai Pudong International Airport second at 4.1 million tonnes. Meanwhile, the International Air Transport Association has sharply lowered its 2026 global airline profit forecast. Due to the blockage of the Strait of Hormuz amid Middle East conflict and average jet fuel prices rising to 152 dollars per barrel, the industry-wide net profit estimate has been slashed from 45 billion dollars to 23 billion dollars, with the net profit margin falling to 2.0 percent. Air China, China Southern Airlines, and China Eastern Airlines together posted a combined net loss approaching 10 billion yuan in the first half, with the second-quarter loss reaching 12.201 billion to 13.801 billion yuan, compared with a combined first-quarter profit of 4.828 billion yuan.

China's three largest airlines—Air China, China Eastern Airlines, and China Southern Airlines—face a combined net loss of up to 9 billion yuan for the first half of 2026, confronting a tougher outlook. With demand remaining weak, doubts are growing over whether the summer travel season can absorb soaring fuel costs. HSBC analysts forecast the trio will post a combined loss of about 16.8 billion yuan for the full year. In contrast, current market estimates expect a combined profit of 1.3 billion yuan, highlighting a sharp divergence in views. Chinese carriers engage in very little jet fuel hedging, leaving them highly exposed to rising crude oil prices.

Shares of Air China, China Eastern Airlines, and China Southern Airlines have each fallen at least 42% so far in 2026, while Cathay Pacific Airways has risen nearly 6%, leaving the three mainland carriers trailing the Hong Kong-based airline by almost 50 percentage points. Morgan Stanley lowered its net profit forecasts for the three major Chinese airlines by an average of 12% last week, citing soft domestic demand. HSBC noted that elevated fuel prices and limited pricing power are pressuring margins, and maintained its buy recommendation on Cathay Pacific as short- and long-haul bookings improved. Investors now await Cathay's first-half earnings in early August and results from the mainland carriers later next month for signs of whether the performance gap will persist.