The three biggest state airlines in China widened losses for the first six months of 2026. The group together lost about 8.2 billion yuan (about $1.22 billion), will make their seventh straight-loss for the first-half. The other hand, the profit-earning first quarter was boost up by record share of travel during Chinese traditional Lunar New Year. Air China, China Eastern Airlines and China Southern Airlines (CSON) have all posted losses that are higher than last year. Air China posted a net loss of 2.3 billion yuan. China Eastern Airlines announced a net loss of 2.
2 billion yuan. China Southern, the biggest of the three airlines on revenue, posted a net loss of 3.7 billion yuan. The announcements brought all three airlines shares downboth on the mainland and in Hong Kong.
Jet fuel was the primary offenders. At all three airlines there was a 3538% increase in costs compared with the same quarter of 2002, a result of high worldwide oil prices which have been maintained because of the continuing hostilities in Middle east. Overall fuel bills of the three airlines combined nearly hit yuan97 billion which was nearly 40% of all revenues. One difference to most foreign carriers is that most of the Chinese airline’s fuel purchasing is not hedged.
Top-line revenues held up despite the heavy losses. China airlines’ revenues grew by 10.5 percent for Air China, 11 percent for China Eastern and 9.7 percent for China Southern. The growth was mainly driven by international routes, and the domestic market was under pricing pressure given competition and sluggish leisure demand outside holidays.
China civil flying passenger numbers edged up a mere 1 percent in the first half to 380 million. China Eastern called operating conditions “severely affected” by a collapsed international route network and “historically high” fuel costs. Carriers had been issuing warning of first-half losses of close to 9 billion yuan as far back as July so the announcement was hardly unexpected. What was but quite startling was how quickly a profit of 4.
8 billion yuan was wiped out in such an inherently fragile industry. The fuel shock has reinforced earlier issues. China aviation remains a long way from returning to a steady profit stream following the hiatus of the pandemic years. Domestic oversupply and fierce price competition have held yields under pressure even as demand numbers appeared to recover.
International emerged slowly with some long haul routes still finding returns suboptimal and high interest rates and currency swings piling further pressure on income statements already burdened by high levels of debt. In the meantime the carriers keep running and grow capacity in response to apparent demand. But the six-month results highlight how exposed China’s big three airlines are to external shocks. With few hedging mechanisms and the single highest operating cost jet fuel stanch increases in crude over the long term will immediately impact margins.
