China’s major airlines report $1.2 billion first-half loss

China’s three largest state-owned airlines—Air China, China Eastern Airlines, and China Southern Airlines—reported a combined net loss of approximately 8.2 billion yuan ($1.22 billion) for the first half of 2026. This marks the seventh consecutive year of first-half losses for the group, a sharp reversal from the combined profit of 4.82 billion yuan recorded in the first quarter.

The primary driver of these losses is a surge in jet fuel costs, which rose between 35% and 38% due to energy price volatility linked to conflicts in the Middle East. Unlike many international competitors, these Chinese carriers hedge relatively little of their fuel, leaving them highly exposed to market fluctuations.

While international revenue grew, particularly on European routes, domestic operations faced significant pressure. Challenges include a weak domestic economy and intense competition from China’s extensive high-speed rail network, which serves as a cost-effective alternative for short and medium-distance travel. Additionally, the sector faces seasonal disruptions from summer typhoons.