Core Viewpoint - The report from CITIC Securities highlights that the capacity release of the civil aviation fleet is constrained by factors such as low introduction of new aircraft, engine maintenance, and supply chain issues, with expectations for a recovery in business travel demand and a potential policy boost for private travel by 2026 [1] Group 1: Capacity and Demand Dynamics - The capacity utilization rate of the fleet is nearing its limit during peak seasons, with a recent recovery in business travel demand [1] - Major airlines are expected to achieve their first profit turnaround post-pandemic in 2025, marking the beginning of a profit release cycle [1] - Domestic airlines are shifting capacity towards international long-haul routes, which is expected to enhance aircraft utilization and reduce unit costs [2][4] Group 2: Cost Management and Profitability - The easing of fuel cost pressures is crucial for profit release, with differences in unit fuel costs driven by engine maintenance and operational strategies [2] - Airlines are employing refined management techniques to optimize financial expenses, which is beginning to show positive effects [2] - The high passenger load factors during the off-peak season, ranging from 85.3% to 93.2%, indicate a strong demand environment [2] Group 3: Economic Indicators and Future Outlook - The recovery in aviation demand is expected to align with the positive turning point of the Producer Price Index (PPI), suggesting a broader economic stabilization [3] - The anticipated narrowing of PPI declines and a return to positive Consumer Price Index (CPI) growth in late 2025 may catalyze a faster recovery in travel demand [3] - The supply-demand growth rate difference for RPK (Revenue Passenger Kilometers) and ASK (Available Seat Kilometers) is projected to turn positive and continue to expand over the next two years [4] Group 4: Supply Constraints and Fleet Growth - The introduction of new aircraft is expected to be limited, with the nominal capacity compound annual growth rate (CAGR) for listed airlines projected at around 4.6% from 2024 to 2027 [5] - Various operational conditions suggest that the actual fleet size CAGR could range from 2.1% to 3.6% depending on delivery scenarios [6] - The high costs of leased aircraft and the need to replace older planes are further constraining effective capacity growth [6] Group 5: Investment Strategy - The recovery in business travel demand is likely to resonate with a mild appreciation of the currency, leading to a significant reduction in airline losses by Q4 2025 [7] - Airlines are focusing on enhancing international long-haul capacity to improve aircraft utilization and profitability [7] - The positive turning point of the PPI indicates a favorable outlook for the aviation sector, presenting new investment opportunities [7]

Core Insights - JetBlue Airways reported a smaller-than-expected adjusted loss for Q2, attributed to cost-cutting measures and a recovery in U.S. travel demand [1][2] - The airline industry is experiencing uneven recovery, with larger competitors Delta Air Lines and United Airlines indicating stable but below-expected booking levels [1] - JetBlue withdrew its 2025 financial forecast in April due to uncertainties from the Trump administration's tariff policies and federal spending cuts impacting consumer travel [1] Financial Performance - For the quarter ending June 30, JetBlue reported an adjusted loss per share of $0.16, better than analysts' expectations of a $0.33 loss [2] - The operating revenue for the quarter was $2.18 billion, while analysts had anticipated $2.28 billion [2] Future Outlook - JetBlue's president noted an improvement in travel demand, with significant increases in bookings made within 14 days of travel and during peak travel periods, a trend that continued into July [1] - The company expects a decline in revenue per available seat mile (RASM) by 2% to 6% in Q3 [1] - JetBlue reaffirmed its 2025 unit cost forecast, projecting a growth of 5% to 7% [2]

Investment Rating - The report maintains an "Outperform" rating for the aviation sector, recommending a focus on specific airlines and related companies [77]. Core Insights - Domestic flight schedules have decreased by 4% compared to 2024, but show a 22% increase compared to 2019, indicating a further easing of domestic supply [7][8]. - International flight schedules are steadily recovering, with plans to restore to 81% of 2019 levels, reflecting a 5% increase compared to 2024 [7][50]. - The overall daily flight schedule for domestic airlines is projected at 17,519 flights, an 18% increase from 2019 [7][8]. Summary by Sections Domestic Market Overview - Domestic flight schedules for the summer-autumn season of 2025 are expected to average 16,081 flights, down 4% from 2024 but up 22% from 2019 [5][11]. - The total daily flight schedule for coordinated airports is projected at 8,041 flights, a 21% increase from 2019 [7][11]. International Market Overview - The average daily international and regional flights are set at 2,487, recovering to 81% of 2019 levels [50][61]. - Specific regional recovery rates include 78% for Australia, 26% for North America, and 95% for Northeast Asia [50][51]. Investment Analysis - The report suggests that external factors such as oil prices and currency exchange rates are improving, which could enhance airline profitability as domestic demand recovers [7][76]. - Recommended airlines include China National Aviation, Spring Airlines, China Eastern Airlines, and others, with a focus on the overall aviation sector's recovery potential [76][77].