China’s three biggest airlines are heading towards another year of losses after reporting a sharp deterioration in their third-quarter financial performance, with soaring jet fuel prices, weak domestic airfares and typhoon-related disruptions weighing on earnings during the peak travel season.Air China and China eastern airlines are on course to record their seventh consecutive annual net loss since the Covid-19 pandemic, according to analyst estimates compiled by LSEG. China Southern Airlines, which returned to profitability in 2025 for the first time since 2019, is also expected to slip back into the red.Air China’s third-quarter net profit dropped 92.6% year-on-year to 270.6 million yuan ($40.62 million). China Eastern reported a quarterly net profit of 64 million yuan, marking a 98.2% decline from the corresponding period last year.China southern, meanwhile, posted a net loss of 609 million yuan for the July-September quarter, compared with a profit of 3.84 billion yuan a year earlier.All three carriers recorded losses during the first nine months of 2026, reversing the profits they had reported over the same period in 2025.
Rising fuel costs weigh on earnings
The July-September period, which coincides with China’s busy summer travel season, is traditionally the most profitable quarter for the country’s airlines. However, the carriers said a steep increase in jet fuel prices had adversely affected their financial results.Jet fuel prices have more than doubled since the US and Israel launched a military campaign against Iran in late February. Chinese airlines, which hedge a much smaller proportion of their fuel requirements than several Asian and European counterparts, are particularly exposed to fluctuations in oil prices.
Intense competition keeps fares under pressure
Domestic airfares also remained weak during the quarter amid stiff competition from other airlines and high-speed rail services.Huatai Securities estimated that air china’s yields, an indicator of average fares, declined 5% during the period, making it difficult for the carrier to offset higher fuel expenses.Nathan Gee, head of asia-pacific transport research at BofA Global Research, said Chinese airlines were likely to remain loss-making in the seasonally weaker fourth quarter because of elevated jet fuel costs.He noted that third-quarter earnings had been marginally better than already subdued market expectations. Industry checks indicated that domestic fares had risen at double-digit rates year-on-year following the October Golden Week holiday, as airlines restrained capacity.However, Gee said fuel costs continued to be the biggest challenge, adding that airline margins remained under severe pressure from expensive jet fuel and subdued consumer demand.Airlines are seeking to increase the number of flying hours per aircraft to manage expenses, but opportunities for significant cost reductions remain limited, he said.Shares of Air China, China eastern and China southern have fallen 38%, 46% and 39%, respectively, so far this year.