Xinda Securities·2025-07-07 08:31Investment Rating - The investment rating for the aviation industry is "Positive" [2] Core Viewpoints - The aviation industry's profitability framework is influenced by capacity supply, travel demand, load factor, ticket price performance, fuel prices, and exchange rate fluctuations, which ultimately affect company profit performance [16][2] - Domestic travel demand is steadily increasing, while international routes have largely recovered to 2019 levels [3][31] - Supply chain disruptions are delaying aircraft deliveries, leading to a contraction in capacity supply [4][6] Summary by Sections Demand - Domestic air passenger traffic increased by 4.2% year-on-year from January to May 2025, with high load factors sustained [3] - International passenger traffic has nearly returned to 2019 levels, with recovery rates of 106.3% for passenger volume and 101.0% for turnover by May 2025 [31][33] - Policies aimed at boosting consumption are expected to enhance public leisure travel demand, thereby increasing aviation travel demand [3][37] Supply - The growth rate of capacity introduction is slowing, and aircraft leasing prices are rising due to ongoing supply chain issues [4] - The average fleet utilization rate is expected to have limited improvement during peak seasons, with a significant gap remaining compared to 2019 levels [5] - The number of grounded aircraft for maintenance has increased, exacerbating capacity constraints [6] Supply and Demand Balance - The industry is experiencing a tight supply-demand balance, with load factors returning to high levels, and ticket prices are expected to rise during peak seasons [6] - In 2023, ticket prices reached historical highs, but are projected to decline in 2024 before rebounding in 2025 [7] - Airlines are likely to benefit from rising ticket prices and declining fuel costs, leading to high earnings elasticity [8] Revenue and Cost Sensitivity - Airlines can maximize revenue through high load factors and unit revenue per route, with domestic capacity growth slowing and international capacity gradually recovering [8] - Fuel cost pressures are expected to ease, with average fuel prices declining year-on-year [8] - Sensitivity analysis indicates that a 1% increase in ticket prices could significantly boost profits for major airlines [8] Investment Recommendations - The report recommends a positive outlook for the aviation industry, emphasizing the potential for improved supply-demand dynamics and ticket price recovery during peak seasons [8]