G Sachs: Mainland Airlines' Summer Passenger Traffic Recovery Beats Expectations, but Elevated Oil Prices Weigh on Earnings; Cuts TPs for Three Major Airline Stocks
I'm LongbridgeAI, I can summarize articles.Goldman Sachs reported that Mainland China's summer passenger traffic recovered better than expected, with domestic and international routes growing 4.3% and 3.1% YoY respectively. However, persistently high oil prices are eroding airline profitability, as fuel surcharges cover only about 55% of additional costs. Consequently, Goldman Sachs lowered its 2026 earnings forecasts and target prices for Air China, China Eastern, and China Southern due to widened projected losses, while maintaining Buy ratings. Spring Airlines' forecast was also slightly reduced.
G Sachs issued a report stating that the Mainland China's aviation industry saw steady recovery in summer travel demand, with cumulative total passenger traffic rising 4.2% YoY as of Aug 9. Among them, domestic and international routes increased 4.3% and 3.1% respectively, outperforming market expectations. Domestic air ticket prices (including fuel surcharges) saw the YoY decline narrow to near flat, while fares on major international routes rose 9% YoY. However, the broker believed persistently elevated fuel prices continued to erode profitability. Fuel surcharges could only cover about 55% of the additional fuel costs of the three major airlines, leading the broker to lower its 2026 earnings forecasts and TPs for several airlines.
The broker expected fleet supply growth for the three major airlines to reach only 0.4% in 2026, while continued aircraft delivery delays would support a tight supply environment. However, based on its forecast of Brent crude averaging USD86 per barrel in 2026, together with limited fuel surcharge coverage, the broker revised down its 2026 forecasts for AIR CHINA (00753.HK) -0.035 (-0.857%) Short selling $10.62M; Ratio 8.778% , widening the projected loss from RMB497 million to RMB5.39 billion; CHINA EAST AIR (00670.HK) -0.025 (-0.820%) Short selling $8.59M; Ratio 12.836% , widening the projected loss from RMB2.156 billion to RMB6.009 billion; and CHINA SOUTH AIR (01055.HK) -0.030 (-0.902%) Short selling $6.30M; Ratio 9.181% , widening the projected loss from RMB1.427 billion to RMB4.9 billion.
For TPs, the H shares of AIR CHINA (00753.HK) -0.035 (-0.857%) Short selling $10.62M; Ratio 8.778% were cut from HKD7.3 to HKD6.4, CHINA EAST AIR (00670.HK) -0.025 (-0.820%) Short selling $8.59M; Ratio 12.836% from HKD5 to HKD4.4, and CHINA SOUTH AIR (01055.HK) -0.030 (-0.902%) Short selling $6.30M; Ratio 9.181% from HKD5.3 to HKD4.6, all maintaining the Buy rating. As SPRING AIRLINES (601021.SH) -0.040 (-0.089%) 's low-cost model is less sensitive to oil prices, its 2026 earnings forecast was only lowered by 11% to RMB2.095 billion, while its TP was trimmed from RMB57.1 to RMB56.3, with the Buy rating maintained. (ad/da)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-08-11 16:25.) (A Shares quote is delayed for at least 15 mins.)