China’s top three airlines head for full-year losses as fuel costs weigh

Chinese airlines, Air China, China Eastern Airlines, and China Southern Airlines, are projected to record full-year losses as surging jet fuel costs, weak domestic fares, and typhoon disruptions impact their profitability during what is typically their most profitable period. Analyst estimates from LSEG suggest that Air China and China Eastern are on track for a seventh consecutive annual net loss since the Covid-19 pandemic, while China Southern may return to the red after posting a profit in 2025.

In the third quarter, which covers the peak summer travel season, all three airlines reported losses, continuing a trend of profitability in 2025. The steep rise in jet fuel prices, which has more than doubled since the US and Israel's military campaign against Iran, has negatively affected the airlines' results. Intense competition, including from high-speed rail, led to weak domestic fares, leaving the airlines unable to recoup higher fuel costs.

Industry experts predict that Chinese airlines will remain in net loss during the traditionally weaker fourth quarter due to the impact of spiking jet fuel. Nathan Gee, head of Asia-Pacific transport research at BofA Global Research, stated that third-quarter earnings were slightly better than very low expectations, but fuel remains the significant headwind.

Airlines are attempting to control costs by boosting flying hours per plane, but significant cost cuts will be challenging. Shares of the three airlines have dropped 38%, 46%, and 39%, respectively, this year.