Air China, China Eastern, and China Southern reported combined net losses of 8.2 billion yuan, driven by high fuel costs and a weak summer travel season.

China's three largest state-owned airlines—Air China, China Eastern Airlines, and China Southern Airlines—reported combined first-half net losses of approximately 8.2 billion yuan. This marks the seventh consecutive year of first-half losses for the carriers, which were impacted by rising jet fuel costs and a challenging summer travel period. The results represent a significant decline from the combined 4.82 billion yuan profit reported in the first quarter.

Fuel Costs and Market Challenges

The airlines reported that fuel costs increased between 35% and 38% during the first half of the year. Because the carriers hedge very little of their fuel purchases, they remain highly exposed to price volatility linked to the conflict in the Middle East. While jet fuel prices have declined from their second-quarter peak, they remain over 50% higher than pre-war levels. Beyond fuel expenses, the airlines face domestic competition from high-speed rail and driving holidays, which has limited their ability to raise fares. Additionally, an unusually active typhoon season, with 21 storms forming in the northwestern Pacific and South China Sea, has disrupted domestic travel routes.

Fleet Expansion and Future Outlook

Despite financial losses, the three carriers continued to expand their fleets of domestically produced COMAC C919 jets. China Eastern increased its fleet to 17 narrow-body planes, while Air China and China Southern each operated 11. However, China Eastern noted it expects to receive 13 fewer C919 deliveries than previously forecast between 2026 and 2028. HSBC analysts project the three carriers could face combined losses of 16.8 billion yuan for the full year of 2026. Shares for all three companies have declined at least 36% so far this year, and none of the airlines declared an interim dividend.