HK Stock Market Move | Airline stocks decline significantly, with the three major airlines losing over 8 billion yuan in the first half of the year. The rise in jet fuel prices is squeezing profit margins.

Airline stocks have fallen sharply. As of the time of this report, Air China Limited (00753) has dropped by 4.53%, trading at HKD 3.79; China Southern Airlines (01055) has decreased by 3.96%, trading at HKD 3.15; Eastern Airlines (00670) has fallen by 3.61%, trading at HKD 2.805; CATHAY PAC AIR (00293) is down by 1.9%, trading at HKD 14.42. In terms of news, on the evening of August 30, Air China Limited and China Eastern Airlines Corporation released their semi-annual reports for 2026. Combined with the semi-annual report previously disclosed by China Southern Airlines, the three major airlines reported a total loss of over 8 billion yuan in the first half of the year. It is reported that the cost of jet fuel procurement is the largest single cost component for airlines. The financial reports indicate that Air China Limited's jet fuel costs increased by 8.439 billion yuan year-on-year in the first half of the year, mainly due to rising fuel prices. During this period, China Eastern Airlines Corporation's operating costs were 74.206 billion yuan, a year-on-year increase of 15.05%, also due to higher fuel costs. Notably, the renewed military strikes between the U.S. and Iran have raised market concerns about escalating tensions in the Middle East, leading to a significant increase in international oil prices on the 31st. Goldman Sachs stated that global refined oil exports have decreased by about 6 million barrels per day year-on-year, with the Gulf and Russia contributing three-quarters of the decline. Unlike crude oil, which can be rerouted, damaged refineries cannot be relocated, and Gulf refined oil exports have only returned to 40% of pre-war levels. Goldman Sachs estimates that global refinery utilization rates will not return to normal until the second half of 2027, prompting them to more than double their diesel profit margin expectations for 2027.