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

China’s three biggest airlines are on track for full-year losses after posting far weaker third-quarter results than last year as surging jet fuel costs, weak domestic fares and typhoon disruptions hit what is normally their most profitable period.

Air China and China Eastern Airlines are heading for a seventh consecutive annual net loss since the Covid-19 pandemic, according to analyst estimates compiled by LSEG.

China Southern Airlines, which returned to the black in 2025 for the first time since 2019, is also set to slip back into the red, the estimates showed.

Air China’s third-quarter net profit fell 92.6% from a year earlier to 270.6 million yuan (US$40.62 million). China Eastern posted a net profit of 64 million yuan for the quarter, down 98.2% from 2025.

China Southern swung to a third-quarter net loss of 609 million yuan from a net profit of 3.84 billion yuan last year.

All three airlines reported losses for the first nine months of the year, a period in which they were profitable in 2025.

The third quarter, which covers the peak summer travel season, is traditionally the strongest for Chinese airlines and set a high base for year-on-year comparisons. But all three carriers said the steep rise in jet fuel prices had a negative impact on their results.

The price of jet fuel JET-SIN has more than doubled since the US and Israel launched a military campaign against Iran in late February.

Chinese airlines hedge far less of their fuel than many Asian and European peers, leaving them more exposed to swings in oil prices.

Intense competition

Domestic fares were weak in the third quarter amid intense competition, including from high-speed rail.

Huatai Securities estimated Air China’s yields, a proxy for airfares, fell 5% during the period, leaving it unable to recoup higher fuel costs.

“Chinese airlines are expected to remain in net loss into the seasonally weaker fourth quarter given the impact of spiking jet fuel,” said Nathan Gee, head of Asia-Pacific transport research at BofA Global Research.

Gee said third-quarter earnings had come in slightly better than “very low expectations”. Checks suggested domestic fares were rising at double-digit rates year on year after the October Golden Week holiday, as airlines kept a lid on capacity. But fuel “remains the big headwind,” he said.

“Chinese airline margin remains under extreme pressure from spiking jet fuel and soft consumption demand,” Gee added. Airlines are trying to boost flying hours per plane to control costs, but big cost cuts will be difficult, he said.

Shares of Air China, China Eastern and China Southern have dropped 38%, 46% and 39% respectively this year.

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