HK Stock Market Move | Aviation stocks fell in the morning, Air China Limited (00753) recently issued a profit warning. The fourth quarter, traditionally a slow season, coupled with currency devaluation, is putting pressure on performance.

In early trading, aviation stocks fell. As of the time of writing, Air China Limited (00753) fell by 3.92% to HK$4.9; China Southern Airlines (01055) fell by 4.03% to HK$3.81; China Eastern Airlines (00670) fell by 2.96% to HK$2.62; and CATHAY PAC AIR (00293) fell by 0.57% to HK$10.5. On the news front, Air China Limited issued a profit warning, expecting a net loss of RMB 160 million to RMB 240 million for the previous year. GF SEC pointed out that, although civil aviation demand continued to recover in 2024, ticket prices were under pressure. According to third-party data, domestic economy class ticket prices for Air China in 2024 are expected to decline by 16% overall. In addition, the fourth quarter is traditionally a slow season, with a month-on-month decrease in passenger volume and load factor, along with pressure from RMB depreciation. It is expected that the single-quarter loss in Q4 will be between RMB 1.5 billion to RMB 2 billion, leading to a slight turn to loss in the annual consolidated net profit. Morgan Stanley stated that the loss of Air China Limited is slightly lower than the bank's expected RMB 489 million loss. Excluding the impact of foreign exchange, the bank expects Air China to achieve profitability last year. The net loss in the fourth quarter is expected to be between RMB 700 million to RMB 800 million, significantly narrower than the net loss of RMB 2.4 billion in the fourth quarter of 2023, mainly due to improved utilization and low oil prices. The bank believes that the performance of Air China meets expectations, and expects the profitability of the Chinese aviation industry to be close to breakeven last year. Gross profit is expected to further improve in the next two years.