Core Insights - The China Southern Airlines Group achieved a record signing amount exceeding 2 billion USD at the 8th China International Import Expo, marking a six-year high [1] - The group signed 23 import procurement agreements with 20 global aviation service manufacturers and suppliers from 9 countries, covering 4 major categories and 19 types of key goods and services [1] Group 1 - The total signing amount of over 2 billion USD represents a significant increase compared to previous years [1] - The agreements include procurement in various sectors such as technical equipment, service trade, and agricultural products [1] - The participation of 20 global suppliers indicates a strong international collaboration in the aviation sector [1]

Core Viewpoint - The aviation industry, particularly the three major airlines, has shown significant improvement in profitability and cash flow in Q3 2025 compared to the same period in 2024, driven by favorable oil prices and effective fare management [1][5]. Group 1: Financial Performance - In Q3 2025, the three major airlines reported a total net profit of 10.27 billion, an increase from 9.19 billion in Q3 2024 [1]. - For the first three quarters of 2025, the cumulative net profit of the three major airlines reached 4.47 billion, a significant improvement from a net loss of 0.68 billion in the same period last year [1]. - The operating net cash flow for Q3 2025 totaled 50.61 billion, significantly higher than 39.89 billion in Q3 2024, with a cumulative cash flow of 95.33 billion for the first three quarters, surpassing 83.98 billion in 2024 [1]. Group 2: Domestic Routes - The capacity growth for major airlines on domestic routes has been notably low, with year-on-year growth rates of 2.7%, 1.8%, and 1.6% for the months of July to September [2]. - The passenger load factor for major airlines in Q3 showed a lower year-on-year increase compared to Q1 and Q2, although there was a recovery in September [2]. - Airlines are prioritizing maintaining high load factors over increasing them further during peak seasons, as the revenue from fare increases is more beneficial [2]. Group 3: International Routes - The growth rate of capacity for international routes has significantly slowed, with a stable operational state being established [3]. - The recovery rate for flights to Thailand remains low, while routes to Japan and South Korea have shown higher recovery levels [3]. - The international passenger load factor has experienced reduced seasonal volatility compared to the previous year, indicating a gradual resolution of capacity surplus issues [3]. Group 4: Aircraft Introduction - The three major airlines are on track to meet their aircraft introduction plans, with 118 aircraft added in the first three quarters, accounting for 61% of the annual target [4]. - The actual number of aircraft retired by September was 47, which is 59% of the planned retirements for the year, indicating a balanced approach to fleet management [4]. - The net increase in aircraft for the three major airlines is expected to be around 4% for the year, reflecting a recovery from previous years' lower-than-planned introductions [4]. Group 5: Investment Outlook - The aviation sector has underperformed compared to the broader market since the beginning of 2025, but there are signs of recovery as the industry enters Q4 [5]. - The combination of improving fundamentals, low oil prices, and effective fare management is expected to enhance market expectations for Q4 [5]. - The three major airlines are positioned near historical average market valuations, with potential for significant margin improvement in Q4 compared to the previous year's substantial losses [5].

Core Insights - The aviation and airport sector experienced a slight decline of 0.13% on November 6, with HNA Holding leading the drop [1][2] - The Shanghai Composite Index closed at 4007.76, up 0.97%, while the Shenzhen Component Index closed at 13452.42, up 1.73% [1] Stock Performance - Key stocks in the aviation sector showed mixed results, with the following notable performances: - China Southern Airlines (7.00, +0.86%, 424,900 shares, 297 million CNY) - China Eastern Airlines (4.96, +0.20%, 1,122,600 shares, 558 million CNY) - HNA Holding (1.80, -3.74%, 10,532,800 shares, 1.918 billion CNY) [1][2] Capital Flow - The aviation and airport sector saw a net outflow of 369 million CNY from institutional investors, while retail investors contributed a net inflow of 200 million CNY [2][3] - The following stocks had significant capital flows: - China Southern Airlines: -32.63 million CNY from institutional investors, +3.14 million CNY from retail investors - HNA Holding: -38.95 million CNY from institutional investors, +12.38 million CNY from retail investors [3]

Investment Rating - The report maintains a "Positive" investment rating for the transportation industry, indicating an expectation of performance that exceeds the market benchmark by more than 5% [2]. Core Insights - The airline sector has shown improvement since Q2 2025, with the three major airlines reporting a combined net profit of 10.27 billion yuan in Q3, up from 9.19 billion yuan in Q3 2024. For the first three quarters, the net profit totaled 4.47 billion yuan, a significant recovery from a loss of 680 million yuan in the same period last year [3][14]. - The operating cash flow for the three major airlines in Q3 reached 50.61 billion yuan, significantly higher than 39.89 billion yuan in the same quarter of 2024. Cumulatively, the cash flow for the first three quarters was 95.33 billion yuan, surpassing 83.98 billion yuan from the previous year [3][16]. - The improvement in airline performance is attributed to lower fuel costs and effective ticket pricing strategies, which have helped maintain high load factors despite a competitive environment [19][23]. Summary by Sections 1. Performance Overview - The airline sector's performance has improved, with high load factors and reduced fuel costs benefiting airline profitability. The three major airlines reported a combined net profit of 10.27 billion yuan in Q3 2025, an increase from 9.19 billion yuan in Q3 2024. For the first three quarters, the net profit was 4.47 billion yuan, a significant recovery from a loss of 680 million yuan in the previous year [3][14]. 2. Domestic Routes - Domestic airlines, particularly the major carriers, have shown restrained capacity growth during peak seasons, with growth rates of 2.7%, 1.8%, and 1.6% from July to September. The overall load factor for major airlines in Q3 saw a lower year-on-year increase compared to Q1 and Q2, although September showed a recovery [4][36]. 3. International Routes - The capacity growth for international routes has stabilized, with the recovery of routes to Japan and South Korea being more pronounced than to Thailand. The recovery rate for U.S. routes remains below 30%. The international operations of major airlines are gradually stabilizing, although some routes still face oversupply issues [5][42]. 4. Aircraft Introductions - The three major airlines are on track to meet their aircraft introduction plans, with 118 aircraft added in the first three quarters, representing 61% of the annual target. The net increase in fleet size is expected to be around 4%, higher than in the previous two years [6][60]. 5. Valuation Levels and Investment Recommendations - The airline sector has underperformed the market since the beginning of 2025, but there is an expectation of a rebound in Q4. The sector's fundamentals have gradually improved, supported by low oil prices and a reduction in price competition. The market is anticipated to focus on marginal improvements in Q4, with the potential for significant loss reduction compared to the previous year [7][71].

Core Viewpoint - The International Air Transport Association (IATA) will offer a Renminbi (RMB) settlement option to airlines and other suppliers starting in December, aimed at reducing exchange rate risks for airlines operating in China and facilitating local suppliers' participation, thereby lowering overall costs [1] Group 1 - IATA will implement RMB settlement through its clearing house for airlines and suppliers [1] - China Southern Airlines and Xiamen Airlines will be the first to pilot the RMB settlement option starting from November 2025 [1] - The new settlement option is expected to ease the currency risk faced by airlines operating in China [1]

Core Viewpoint - The International Air Transport Association (IATA) has announced the addition of the Chinese Yuan (RMB) as a settlement currency in its clearing house, marking a significant step forward for RMB internationalization [1][2]. Group 1: RMB as a Settlement Currency - The RMB settlement will be available starting December 2025, following a trial run, providing significant benefits to airlines operating in China by reducing exchange rate risks and simplifying local supplier access [2]. - China Southern Airlines and Xiamen Airlines will be the first to pilot the RMB settlement in November 2025 [4]. - The introduction of RMB settlement is seen as a positive development for the Chinese aviation industry, facilitating faster settlements and lowering costs associated with multiple currency exchanges [4][7]. Group 2: Market Reaction - Following the announcement, airline stocks experienced a notable increase, with Southern Airlines and China National Aviation rising nearly 2%, and Huaxia Airlines increasing over 5% [5]. - The aviation index showed a slight increase of 0.63%, reflecting positive market sentiment towards the new RMB settlement option [6]. Group 3: IATA Clearing House Operations - The IATA Clearing House currently supports seven currencies and provides efficient settlement services for 581 airlines and related enterprises, with a projected settlement amount of $63.8 billion in 2024, including 33 airlines operating in China [6]. - IATA's senior vice president emphasized that the addition of RMB settlement is a crucial step in meeting the demand for cost-effective financial services from member airlines [7]. Group 4: RMB Internationalization - The People's Bank of China (PBOC) highlighted the steady rise of the RMB's international status, noting it is now the largest settlement currency for China's foreign trade and the second-largest trade financing currency globally [8]. - The PBOC has signed 32 effective swap agreements with central banks from various countries, covering major economies across six continents, amounting to approximately 4.5 trillion RMB [8]. - Future plans include building a self-controlled cross-border payment system for RMB and enhancing the efficiency of cross-border RMB clearing services [9].

Market Performance - The aviation and airport sector increased by 1.32% on November 5, with Huaxia Airlines leading the gains [1] - The Shanghai Composite Index closed at 3969.25, up 0.23%, while the Shenzhen Component Index closed at 13223.56, up 0.37% [1] Stock Performance - Huaxia Airlines (002928) closed at 11.07, up 4.14% with a trading volume of 228,800 shares and a turnover of 250 million yuan [1] - HNA Holding (600221) closed at 1.87, up 3.31% with a trading volume of 13,966,000 shares and a turnover of 2.608 billion yuan [1] - Spring Airlines (601021) closed at 55.48, up 2.42% with a trading volume of 8,650 shares and a turnover of 476 million yuan [1] - China National Aviation (601111) closed at 8.26, up 1.98% with a trading volume of 549,400 shares and a turnover of 451 million yuan [1] - China Southern Airlines (600029) closed at 6.94, up 1.17% with a trading volume of 381,400 shares and a turnover of 263 million yuan [1] - Xiamen Airport (600897) decreased by 2.48% to 17.28 with a trading volume of 262,600 shares [2] Capital Flow - The aviation and airport sector experienced a net outflow of 118 million yuan from institutional investors, while retail investors saw a net inflow of 131 million yuan [2][3] - Major stocks like HNA Holding and Huaxia Airlines had mixed capital flows, with HNA Holding seeing a net inflow of 108 million yuan from institutional investors [3] - Retail investors contributed positively to the capital flow in several stocks, including China National Aviation and Shenzhen Airport [3]

Core Insights - The annual Double 11 shopping event has seen significant sales in flight pass products, with over 600,000 units sold by November 4, 2023, and nearly 80% of these being cross-border flight passes [1] - Popular flight pass products include various airline offerings, with Southern Airlines' international economy class ticket card selling over 90,000 units [3] - New entrants like Cathay Pacific and AirAsia have also performed well, with Cathay Pacific selling nearly 20,000 units and AirAsia's booking volume increasing by over 80% year-on-year [4] Sales Performance - The sales of flight passes have been boosted by effective marketing strategies, including increased investment in platforms like WeChat Video and Xiaohongshu, leading to multiple high-revenue products [4] - The price advantage and flexibility of flight passes are key factors driving consumer purchases, with significant savings compared to regular ticket prices [4] Market Trends - The demand for high-value, flexible flight pass products indicates a strong supply-demand dynamic in the airline industry, reflecting a shift in consumer preferences towards more adaptable travel options [5] - The design of rights-based flight products is becoming a standard for airlines and online travel agencies (OTAs) as they innovate to meet the needs of modern consumers [5]

Core Viewpoint - Airline stocks are generally rising, driven by positive news regarding holiday arrangements and performance forecasts for the airline industry in China [1] Group 1: Stock Performance - Eastern Airlines (00670) increased by 5.29%, trading at 4.38 HKD [1] - Air China (601111) (00753) rose by 3.92%, trading at 6.1 HKD [1] - Southern Airlines (600029) (01055) saw a 2.08% increase, trading at 4.89 HKD [1] - Cathay Pacific (00293) experienced a slight rise of 0.36%, trading at 11.27 HKD [1] Group 2: Industry News - On November 4, the State Council released a notice regarding the holiday schedule for 2026, which includes a 9-day Spring Festival holiday, marking the longest in history [1] - Cathay Haitong Securities noted that A-share airline companies achieved counter-cyclical growth in Q3 2025, surpassing Q3 2019 for three consecutive years, indicating a potential upward trend in profitability [1] Group 3: Future Outlook - The concept of "anti-involution" is expected to help reduce losses in Q4's off-peak season and turn around the overall performance for the year [1] - The long-term outlook for Chinese airlines is optimistic, with market-driven ticket pricing, steady demand growth, and an optimized customer base expected to drive an increase in profitability for airlines in 2026 [1]

Core Insights - The "Double 11" shopping festival has seen significant sales in flight pass cards, with over 600,000 units sold by November 4, 2023, and nearly 80% of these being cross-border flight passes [1] - Major airlines such as China Southern Airlines, All Nippon Airways, and others have reported strong sales, with individual products exceeding 10,000 units sold, and China Southern's single economy class pass surpassing 90,000 units [1] - New entrants like Cathay Pacific and AirAsia have also performed well, with Cathay Pacific selling nearly 20,000 units and AirAsia's booking volume increasing over 80% year-on-year [1] Group 1 - The flight pass cards are popular among consumers during the "Double 11" shopping festival, indicating a strong demand for travel-related products [1] - The sales strategy has included increased investment in diverse platforms such as WeChat and Xiaohongshu, leading to the emergence of several high-revenue flight pass products [1] - The focus on high-value, flexible flight pass products has created a favorable supply-demand dynamic in the airline and online travel agency (OTA) sectors [2] Group 2 - Price competitiveness is a key factor influencing consumer purchases, with significant savings available when using flight pass cards compared to regular ticket prices [2] - The design of rights-based products like flight pass cards aligns with consumer preferences, driving innovation in product offerings and experiences within the airline and OTA industries [2]