China’s “Big Three” Airlines Rebound with Q3 Profits as Travel Demand Surges

BEIJING — October 30, 2025:
After a turbulent year marked by weak demand and high operating costs, China’s three largest airlines — Air China, China Eastern Airlines, and China Southern Airlines — reported their first collective quarterly profit in a year, thanks to a strong rebound in summer travel. However, analysts warn that the gains may be short-lived as economic headwinds and fare competition continue to weigh on the sector.

According to earnings released this week, the trio benefitted from a summer surge in domestic and international passenger traffic, but challenges such as oversupply, slowing GDP growth, and intense competition with high-speed rail threaten to limit further recovery.

Air China Posts Q3 Profit, Plans 20 Billion Yuan Share Issue

Air China (601111.SS), the country’s flagship carrier, posted a net profit of 4.14 billion yuan ($581 million) for the third quarter — a slight 5.16% decline year-on-year, the airline said in a stock exchange filing.

To strengthen its balance sheet, Air China announced plans to raise up to 20 billion yuan through an A-share private placement, aimed at reducing debt and replenishing working capital. The move reflects growing efforts by Chinese carriers to restore financial stability following years of pandemic-era losses.

“While profitability has returned, the recovery remains fragile,” said an aviation analyst at Huatai Securities. “Air China’s share issue shows that liquidity concerns are still top of mind.”

China Eastern Returns to Profit with Help from C919 Jet Rollout

China Eastern Airlines (600115.SS), the launch customer for the domestically produced COMAC C919 jet, reported a Q3 profit of 3.53 billion yuan, rebounding from three consecutive quarterly losses. The figure compares to 2.63 billion yuan in profit during the same period last year, signaling moderate improvement driven by a busy travel season and expanding route network.

China Eastern has positioned itself as a symbol of China’s aviation independence strategy, incorporating the C919 narrow-body aircraft into its fleet to reduce reliance on Western manufacturers like Boeing and Airbus.

China Southern Maintains Solid Gains Despite Market Pressures

China Southern Airlines (600029.SS), which reported its results earlier in the week, posted a profit of 3.84 billion yuan, up from 3.19 billion yuan in Q3 2024. The airline’s performance was supported by strong domestic traffic and growing international routes, particularly to Southeast Asia and the Middle East.

However, despite the positive quarterly figures, all three carriers continue to grapple with the lingering effects of pandemic-era losses. They have reported annual losses since 2020, though industry analysts now project that 2025 could mark their first full-year profit since COVID-19.

Domestic Competition and Fare Pressure Threaten Momentum

While passenger demand spiked during China’s National Day holiday, when average one-way fares rose 10% year-on-year to 910 yuan, the momentum has faded. Data from VariFlight shows that from October 13–19, average domestic fares slipped to 768 yuan, roughly 12% below September levels.

The slowdown reflects the seasonal drop in travel and intense competition among airlines and high-speed rail operators. Analysts warn that aggressive discounting could further erode margins heading into the winter season.

“China’s aviation market is oversupplied relative to demand,” said one industry researcher in Shanghai. “Unless capacity growth is managed, profitability could quickly vanish again.”

International Flights Recover but Lag Pre-Pandemic Levels

International capacity has rebounded to about 85% of 2019 levels, with strong recovery to Asia and Europe. However, China–U.S. routes remain under 35% of pre-pandemic capacity due to geopolitical frictions and slow regulatory approvals.

Carriers have shifted focus toward intra-Asia connectivity and tourism-driven markets, leveraging demand from Thailand, Japan, and South Korea.

The Road Ahead: Recovery or Plateau?

Despite the positive earnings reports, the sustainability of profits remains uncertain. Analysts cite slower Chinese economic growth, volatile fuel prices, and declining fares as major headwinds.

Still, there is cautious optimism. With international tourism rising, domestic demand stabilizing, and the C919 fleet expansion underway, Chinese airlines may be on the cusp of a long-term recovery — provided they manage capacity and debt efficiently.