Morgan Stanley·2025-06-10 10:50Investment Rating - The industry investment rating is "In-Line" [5][10]. Core Insights - China's total absolute non-domestic Available Seat Kilometers (ASK) was 76% of 2019's level as of June 9, 2025, reflecting a 12% year-over-year increase but a slight decrease of 1% week-over-week [10]. - Excluding US routes, the recovery of China's absolute non-domestic ASK reached 86% of 2019's level [10]. - Capacity additions were noted on Hong Kong (+2%) and US (+1%) routes, while reductions occurred on Macau (-1%) and Korea (-1%) routes [10]. - Significant year-over-year increases in ASK were observed for Japan (+35%), Korea (+25%), Hong Kong (+17%), and US (+13%) routes, while Macau (-15%) and Thailand (-31%) saw decreases [10]. - Seat capacity for Japan, Thailand, and Korea routes reached 106%, 47%, and 94% of 2019 levels, respectively, while US routes were at 29% [10]. Summary by Relevant Sections International Air Capacity - Non-domestic ASK was 76% of 2019's level as of June 9, 2025, compared to 77% the previous week [2]. - Total seat capacity has recovered to approximately 80% of 2019's level [5]. Capacity Recovery - The report highlights that total absolute non-domestic ASK was -1% week-over-week and +12% year-over-year [10]. - Specific route recoveries include Japan at 106%, Korea at 94%, and US routes at 29% of 2019 levels [10]. Company Ratings - Air China Limited (601111.SS) rated Equal-weight, Air China Limited (0753.HK) rated Overweight [62]. - Cathay Pacific Airways (0293.HK) rated Equal-weight, China Eastern Airlines (600115.SS) rated Equal-weight [62]. - China Southern Airlines (600029.SS) rated Equal-weight, COSCO SHIPPING Energy Transportation (1138.HK) rated Overweight [62].