Chinese airline stocks declined on Monday following weak first-half results and a surge in jet fuel costs driven by rising oil prices.
Air China’s shares dropped 5% in Hong Kong trading after the carrier reported a first-half net loss of 2.3 billion yuan ($340 million), widening from a 1.8 billion yuan loss in the same period last year. China Eastern Airlines posted a 2.2 billion yuan loss, compared with a 1.4 billion yuan loss a year earlier. China Southern Airlines fell 5.5%, while Cathay Pacific declined 2.2%.
The sector’s performance reflected broader challenges, including higher fuel expenses and limited hedging against price volatility. Domestic competition in China further constrained carriers’ ability to offset costs through ticket pricing.
Brent crude futures rose above $90 a barrel on Monday, driven by geopolitical tensions after U.S. forces struck Iranian launchers on Larak Island. Iran retaliated by targeting U.S. forces in Jordan, fueling supply concerns and pushing oil prices higher. Jet fuel costs, a major expense for airlines, have climbed alongside the surge in crude, pressuring profit margins.
Analysts noted that Chinese airlines remain particularly vulnerable to fuel price swings due to limited hedging strategies and competitive market conditions. The sector’s outlook remains tied to both oil price stability and domestic demand recovery.
