Key Takeaways

• China airlines losses 2026 reach a combined $1.22 billion for China’s three biggest airlines in the first half.
• Jet fuel costs surge 35% to 38%, squeezing airline profits.
• Typhoons and weak domestic demand cloud the crucial summer travel outlook.

China airlines losses in 2026 reach about $1.2 billion in the first half as jet fuel costs surge and summer typhoons disrupt travel, clouding the sector’s recovery.

China airlines losses 2026 deepen as fuel costs surge

Air China, China Eastern Airlines and China Southern Airlines report a combined net loss of about 8.2 billion yuan ($1.22 billion) for the first half of 2026. The result marks the seventh consecutive year the three carriers have reported first-half losses.

The losses reverse a combined first-quarter profit of 4.82 billion yuan, which was supported by strong Lunar New Year travel demand. Shares of all three airlines fell in mainland China and Hong Kong trading Monday following the results.

Air China reports a net loss of 2.3 billion yuan, compared with 1.81 billion yuan a year earlier. China Eastern reports a 2.2 billion yuan loss, while China Southern reports a 3.7 billion yuan loss, compared with 1.43 billion yuan and 1.53 billion yuan, respectively, a year earlier.

Jet fuel costs rose between 35% and 38% at the three airlines during the first half as conflict in the Middle East pushed energy prices higher. Unlike many Asian and European competitors, Chinese airlines hedge relatively little of their fuel purchases, leaving them more exposed to changes in oil prices.

China Eastern says its profit environment is “severely undermined” by disrupted international routes and persistently high jet fuel prices linked to the Middle East conflict. China Southern says there is currently “no effective means available” to manage its exposure to jet fuel price fluctuations.

Revenue grows despite weak domestic demand

Despite the losses, revenue at all three carriers grows by about 10% during the first half, supported by stronger international travel.

Air China’s revenue rises 10.5%, China Eastern’s increases 11.1%, and China Southern’s climbs 9.7%. European routes perform particularly well as some travelers avoid Middle Eastern hubs disrupted by the conflict.

Domestic travel remains more challenging. Weaker economic conditions, competition from high-speed rail and driving holidays limit the airlines’ ability to raise fares without risking weaker demand.

Jet fuel prices have fallen from their second-quarter peak but remain more than 50% above prewar levels, continuing to pressure airline profitability.

Typhoons cloud peak summer outlook

The third quarter is typically the most profitable period for Chinese airlines, but an unusually strong typhoon season disrupts domestic routes during the peak summer travel period.

Meteorological data shows 21 typhoons have formed in the northwestern Pacific Ocean and South China Sea so far this year, nine more than the historical average for the same period.

Aviation data firm Flight Master projects Chinese airlines will carry 142 million passengers on domestic and international routes in July and August, down 3.6% from a year earlier. That would mark the first contraction in the peak summer season since 2022.

HSBC analysts expect the three airlines to report combined losses of about 16.8 billion yuan for 2026, compared with market expectations for a combined profit of 1.3 billion yuan.

The airlines continue expanding their fleets of domestically produced COMAC C919 jets. China Eastern operates 17 C919s after receiving three in the first half, while Air China and China Southern each operate 11 after receiving two and three, respectively.

China Eastern expects 13 fewer C919 deliveries than previously forecast between 2026 and 2028. Air China maintains its earlier forecast, while China Southern does not disclose a delivery forecast in its interim report.