Goldman Sachs: Mainland airlines' summer vacation passenger traffic recovery beat expectations, but high oil prices dragged down profits and lowered target prices for the three major airline stocks

The Zhitong Finance App learned that Goldman Sachs released a research report saying that the mainland aviation industry's summer passenger flow performance has been recovering steadily. As of August 9, the cumulative total passenger traffic volume increased 4.2% year on year, and its domestic and international routes increased by 4.3% and 3.1% respectively, which is better than market expectations. The year-on-year decline in domestic air ticket prices (including fuel surcharges) has narrowed to close to flat, and ticket prices for major international routes have risen 9% year over year. However, the bank believes that high fuel prices continue to erode profits, and that fuel surcharges can only cover about 55% of the additional fuel costs of the three major airlines, so it lowered the 2026 profit forecast and target prices for many airlines.

The bank expects that the fleet supply of the three major airlines will increase by only 0.4% in 2026, and continued delays in aircraft delivery will support the tight supply pattern. However, based on the forecast of an average price of 86 US dollars per barrel of Brent futures in 2026, and limited fuel surcharge coverage, the bank lowered the 2026 performance forecast of Air China (00753), which increased from a loss of 497 million yuan to a loss of 5.39 billion yuan; China Eastern Airlines (00670) increased from a loss of RMB 2,156 billion to a loss of RMB 6.09 billion; China Southern Airlines (01055) expanded from a loss of RMB 1,427 billion to a loss of RMB 4.9 billion.

In terms of target prices, Air China H shares were lowered from HK$7.3 to HK$6.4, China Eastern Airlines H shares were lowered from HK$5 to HK$4.4, and China Southern Airlines H shares were lowered from HK$5.3 to HK$4.6, all maintaining a “buy” rating. Spring Airlines (601021.SH) lowered its 2026 profit forecast by only 11% to RMB 2,095 billion due to the low cost model being less sensitive to oil prices, and the target price was lowered from RMB 57.1 to RMB 56.3 billion, maintaining a “buy” rating.