Investment Rating - The industry investment rating is "Positive" [5] Core Viewpoints - The report highlights that the domestic airline industry is currently in a low season, with a modest increase in capacity deployment of 1.1% year-on-year in June, but a decrease of approximately 2.9% compared to May. Demand remains weak, leading airlines to adopt a more restrained approach to capacity deployment [2][10][14] - Eastern Airlines has shown a notable increase in passenger load factor, rising against the trend of other major airlines, indicating a strategic focus on improving load factors [2][30] - The report anticipates that as the peak summer travel season approaches, operational pressures on the industry are expected to improve, with potential for higher ticket prices due to increased load factors [3][11][38] Summary by Sections 1. Domestic Route Capacity Deployment - In June, listed companies increased domestic route capacity by 1.1% year-on-year, but saw a decrease of about 2.9% month-on-month. Major airlines like Eastern Airlines and Air China reduced capacity by 5.1% and 4.3% respectively compared to May [2][14][16] - The overall passenger load factor for listed companies decreased by 0.4 percentage points month-on-month but increased by approximately 1.7 percentage points year-on-year. Eastern Airlines' load factor continued to rise, reflecting its prioritization of this metric in sales strategies [30][38] 2. International Route Capacity Deployment - International route capacity for listed airlines increased by about 17.4% year-on-year in June, but decreased by 1.5% compared to May. The demand growth for international routes appears to be slowing [3][55] - The passenger load factor for international routes improved by 0.9 percentage points month-on-month and by 1.0 percentage point year-on-year, indicating a slight recovery despite ongoing demand pressures [3][55] 3. Airport Throughput - Major airports such as Shanghai and Shenzhen reported year-on-year growth in international passenger throughput of 17% and 19% respectively. However, there has been a recent slowdown in growth, with some airports experiencing a decline in international passenger numbers over the past two months [68][70]

Investment Rating - The report maintains a "Recommended" rating for Air China [2][10]. Core Insights - In 2024, Air China achieved revenue of 166.699 billion yuan, a year-on-year increase of 18.14%, while the net profit attributable to shareholders was -237 million yuan, a reduction in losses of 77.32% compared to the same period in 2023 [3]. - The report highlights a significant increase in capacity and passenger load factor, with capacity up by 21.74% and load factor up by 6.63 percentage points to 79.85%, despite a 12.41% decline in revenue per passenger kilometer [3][4]. - The airline industry is expected to focus on stabilizing prices and improving revenue quality in 2025, as the Civil Aviation Administration of China emphasizes the need for better supply-demand matching and price regulation [5]. Financial Performance Summary - Revenue for 2024 is projected at 166.699 billion yuan, with a growth rate of 18.14% [10]. - The net profit for 2025 is estimated to be 3.975 billion yuan, with an EPS of 0.23 yuan [10]. - The gross margin for passenger transport in 2024 was 4.13%, showing a slight increase from the previous year, but still at a low level [5]. Operational Insights - Domestic routes saw a capacity increase of 5.36% and a load factor improvement of 7.04 percentage points, while revenue per passenger kilometer decreased by 9.70% [4]. - International routes experienced a 100.50% increase in capacity, with a load factor increase of 8.52 percentage points, but revenue per passenger kilometer fell by 22.63% [4]. - The company plans to introduce 47 new aircraft in 2025 while retiring 17, maintaining a low growth rate in fleet size to manage supply pressures [5].

Investment Rating - The report maintains a "Recommended" rating for China National Aviation (601111.SH) [2][10] Core Views - In 2024, the company achieved revenue of 166.699 billion yuan, a year-on-year increase of 18.14%, while the net profit attributable to shareholders was -237 million yuan, a reduction in loss of 77.32% compared to the same period in 2023 [3] - The report highlights a significant increase in capacity and passenger load factor, but a decline in passenger kilometer revenue, indicating a trend of volume increase but price decrease across the industry [3][4] - The company is expected to benefit from improvements in ticket prices in 2025, as the focus shifts from increasing load factors to enhancing revenue quality [5][10] Financial Performance Summary - In 2024, the company reported a gross margin of 4.13% in its passenger business, slightly up from the previous year, but still at a low level [5] - The company plans to introduce 47 new aircraft in 2025 while retiring 17, maintaining a low growth rate in supply to alleviate excess capacity pressure [5] - The projected net profits for 2025-2027 are 3.98 billion, 7.79 billion, and 9.44 billion yuan respectively, with corresponding EPS of 0.23, 0.45, and 0.54 yuan [10]