Dongxing Securities·2025-11-06 07:20Investment 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].