China's Three Largest Airlines Report 8.2 Billion Yuan Loss

The three largest state-owned carriers in China—Air China, China Eastern Airlines, and China Southern Airlines—reported combined net losses of approximately 8.2 billion yuan for the first half of 2026. This financial downturn follows a profitable first quarter that had been bolstered by Lunar New Year travel demand.

China Southern Airlines recorded the steepest decline with a 3.7 billion yuan loss, while Air China and China Eastern Airlines reported losses of 2.3 billion yuan and 2.2 billion yuan, respectively. The losses were primarily driven by a 35% to 38% increase in aircraft fuel costs resulting from the Iran war and conflict in the Middle East. These costs were compounded by a lack of fuel hedging strategies and weak domestic pricing caused by a cost-sensitive market and competition from high-speed rail.

Despite these losses, the Civil Aviation Administration of China reported a 1.0% increase in passenger traffic volume for the period, with international demand providing resilient revenue growth. The carriers continue to expand their fleets with domestically produced COMAC C919 jets, although China Eastern Airlines has reduced its delivery forecast for the aircraft. The outlook for the remainder of the year remains uncertain due to a strong typhoon season disrupting summer travel.