Dongxing Securities·2025-05-13 12:01Investment Rating - The report maintains a "Positive" outlook for the transportation industry, particularly the aviation sector [2]. Core Insights - The aviation industry has faced significant operational pressure since the second half of 2024, with major airlines reporting substantial losses despite a slight reduction in losses compared to the previous year [4][14]. - Domestic flight occupancy rates have improved significantly, with the average economy class ticket price decreasing by 12.1% year-on-year in 2024 [4][19]. - The Civil Aviation Administration of China is promoting a rebalancing of supply and demand in the domestic market, with measures to control capacity and enhance price regulation [5][34]. - The international routes are experiencing slower recovery in demand, leading to structural oversupply that is expected to persist in the short term [6][44]. - Airlines show a low willingness to introduce new aircraft, with actual aircraft acquisitions falling short of planned numbers, indicating a continued low growth rate in supply [7][58]. - The report suggests that the current low PCF valuation of airline stocks indicates potential for upward price elasticity during the peak season [8][76]. Summary by Sections Performance Overview - The aviation sector has been under pressure, with major airlines reporting a combined loss of approximately 10.8 billion yuan in Q4 2024, although this is an improvement from the 14.3 billion yuan loss in Q4 2023 [4][14]. - In Q1 2025, the combined loss of major airlines increased to 4.4 billion yuan, up from 2.1 billion yuan in Q1 2024 [4][14]. Domestic Route Outlook - The Civil Aviation Administration is focusing on enhancing the adaptability of supply and demand in the aviation market, with measures to control capacity and improve price behavior [5][34]. - In Q1 2025, the overall capacity of major airlines on domestic routes decreased year-on-year, while occupancy rates continued to rise [5][37]. International Route Outlook - The recovery of international routes is more challenging, with some long-haul routes still not returning to normal demand levels, leading to low utilization rates of wide-body aircraft [6][44]. - The report notes that the supply of long-haul routes is nearing saturation, and further increases in capacity could negatively impact ticket prices [6][48]. Aircraft Introduction - The willingness of airlines to introduce new aircraft remains low, with actual acquisitions significantly below planned numbers, indicating a trend of low growth in supply [7][58]. - The report anticipates that the supply side will continue to grow at a low rate, aiding the transition from oversupply to balance in the market [7][67]. Oil Prices and Exchange Rates - Overall oil prices in 2024 were lower compared to 2023, which is favorable for the recovery of industry profitability [68]. - The exchange rate has remained stable since 2024, limiting its impact on the aviation industry [72]. Investment Recommendations - The report highlights that the current PCF valuation of airline stocks is at a relatively low level, suggesting strong potential for upward elasticity during the peak season [8][76]. - With high occupancy rates during the off-peak season, any increase in demand during the peak season is likely to translate into higher ticket prices [8][86].