Bank of America Securities: Expects domestic airline ticket prices to be under pressure, affecting profit. Expects the three major Chinese airline H-shares to "underperform the broader market".

Bank of America Securities released a research report stating that the performance of four mainland airlines in the third quarter was divergent. Among them, CHINA EAST AIR (00670) had the strongest growth in net profit, rising by 34% year-on-year; followed by CHINA SOUTH AIR (01055), which rose by 20% year-on-year. As for Spring Airlines (601021.SH) and Air China Limited (00753), their net profits fell by 6% and 11% respectively. Revenue per available seat kilometer performed better than expected during the period, with stable data in September. The bank expects that a decrease in fuel costs will benefit the overall cost structure, but unit costs after excluding fuel varied, with Chinese airlines relatively lagging behind in cost optimization. The bank adjusted the profit forecast for Air China in 2025 from a loss of 54 million yuan to a profit of 473 million yuan, and reduced the forecasts for 2026 and 2027 by 5.7% and 4.2%. In addition, the profit forecast for China Southern Airlines in 2025 was reduced by 54%, with forecasts for 2026 and 2027 increased by 16% and 14% respectively; forecasts for China Eastern Airlines in 2025-27 were increased by 56%, 0.8%, and 0.7%. As for Spring Airlines, the profit forecast for 2025 was reduced by 2.7%, while the forecasts for 2026 and 2027 remained unchanged. The bank reiterated its "underperform" rating for Air China, China Eastern Airlines, and China Southern Airlines, as domestic ticket prices still face pressure, posing downside risks to profit in 2025 and 2026; it also reiterated a "buy" rating for Spring Airlines due to its cost leadership position and expected steady growth in 2025-26.