Zheshang Securities: The aviation industry's performance in the first three quarters of 25 years was resilient, and the 26-year profit recovery is expected to accelerate

The Zhitong Finance App learned that Zheshang Securities released a research report saying that aviation's profit recovery in '26 is expected to accelerate. In the first three quarters of 25 years, the aviation industry showed full resilience, and the three major airlines are expected to make profits for the whole year. On the policy side, on the one hand, it calls on the industry to fight back against internal circulation; on the other hand, it also continues to make efforts on the demand side. Spring and autumn vacations have now been promoted in some provinces and cities to provide support for off-season ticket prices. Looking ahead to 2026, continued supply-side tension is the underlying logic. Demand is waiting to be fixed, and the bank judges that airline profit recovery is expected to accelerate.

The main views of Zheshang Securities are as follows:

Establishing key hypotheses

Marginal improvements in the economic environment and consumption power, rising travel demand, and continuous improvement in supply and demand relationships support airline passenger occupancy rates and ticket price performance. International routes continue to resume, driving the recovery of airline driver fleet utilization rates and diluting fixed airline costs. Oil prices have declined at the center, and there has been no sharp depreciation of the RMB exchange rate.

The biggest weakness of establishment

The recovery in consumption fell short of expectations, and travel demand fell short of expectations, affecting passenger occupancy rates and ticket price performance, thereby affecting airline revenue. The recovery of international routes fell short of expectations, hampering the recovery in the utilization rate of the airline driver fleet and affecting performance. The sharp rise in oil prices and the sharp depreciation of the RMB have eroded airline profits.

Other aviation risks: Oil prices have risen sharply. (1) Probability of occurrence: Low probability. (2) Time of appearance: Probably 26H1. (3) Basis for judgment: If the geopolitical tension increases, it may trigger a new round of market concerns about crude oil supply, thereby boosting oil prices. (4) Mechanism of action: Aviation fuel costs account for about 30% of airline operating costs, and airline performance is greatly affected by fluctuations in fuel prices. (5) Level of impact: Operating side: When fuel prices rise, airlines can relieve some of the pressure by introducing fuel surcharges, but at the same time, high fuel surcharges will have a negative impact on demand. Market side: Since fuel is an important cost item for airlines, rising oil prices will affect performance and may have a certain impact on stock price trends.

Tracking methods

Keep a close eye on oil prices. Other aviation risks: RMB depreciation suppresses front-end profits. (1) Probability of occurrence: Low probability. (2) Time of appearance: Probably 26H2. (3) Judgment basis: If the Federal Reserve is expected to cut interest rates, changes in domestic and foreign policies will affect the trend of the RMB exchange rate. (4) Mechanism of action: Some of the airline's financial lease liabilities, bank loans and other loans are mainly in US dollars, and some assets are also in US dollars; at the same time, the company also needs to conduct foreign currency transactions in the future to increase its fleet size and purchase aviation materials. The overall foreign currency exposure is not small, and the exchange rate will have a great impact on profit fluctuations. (5) Level of impact: Operating side: Exchange rate fluctuations affect airline earnings in the short term, but have less impact on actual operations and cash flow. Market side: If the RMB fluctuates greatly, it will have a certain impact on the stock price trend. (6) Tracking method: closely track the RMB exchange rate.

Risk Alerts

(1) Demand falls short of expectations; (2) sharp rise in oil prices; (3) risk of large exchange rate fluctuations; (4) airport duty-free sales fall short of expectations; (5) changes in airport duty-free contracts fall short of expectations; (6) the growth rate of the express delivery industry falls short of expectations; (7) the worsening of the express delivery price war exceeds expectations; (8) geopolitical risks: shipping companies operate globally, and political risks between countries have a strong impact on the operation of shipping companies.