China Southern Airlines, Air China, and China Eastern Airlines, the three state-owned carriers, reported combined losses reaching 8,16 billion yuan (approximately USD 1,21 billion) for the first six months of the year. Nikkei estimates that in Q2 alone, these airlines could have lost between over USD 560 million and USD 770 million.
The primary cause of these losses was a significant rise in fuel costs, which increased by over 30%. This led to an additional expenditure of 25,74 billion yuan for the airlines, surpassing their total revenue increase of 24,31 billion yuan. Despite this, the airlines' revenue grew by about 10% compared to the same period in 2025, driven by stable growth in passenger travel demand and cargo volumes, particularly on international routes.
In contrast, some other Asian airlines reported positive business results in the first half of the year by employing fuel hedging strategies. Cathay Pacific, the Hong Kong-based airline, recorded a net profit of approximately USD 800 million, a 71% increase compared to the same period last year. Cathay Pacific Chief Financial Officer Rebecca Sharpe stated that about 30-35% of the airline's fuel needs were hedged over a 12-month cycle, helping reduce fuel costs by nearly USD 112 million in the first half of the year, even as overall fuel costs rose 67% to over USD 3 billion.
Similarly, Thai Airways implemented fuel hedging measures tailored to market conditions. The Thai airline still recorded a net profit of USD 46,16 million in Q2, though this was an 87% decrease compared to the same period in 2025.
Meanwhile, China's state-owned airlines have rarely adopted these hedging measures. In a report submitted to the Shanghai Stock Exchange, China Southern stated that it had no fuel hedging contracts in effect during the period. Air China collected fuel surcharges from passengers to offset rising costs but did not disclose information regarding its fuel hedging activities. China Eastern stated that it had engaged in jet fuel hedging after thoroughly assessing the derivatives market situation, but by the end of June, no contracts remained in effect.
China Southern, the largest Chinese airline by revenue, typically purchases domestic aviation fuel at spot market prices. Currently, the airline lacks effective measures to manage risks from fuel price fluctuations. According to China Southern, every 10% fluctuation in aviation fuel prices could cause the airline's costs to increase or decrease by approximately 3,5 billion yuan (over USD 445 million).
Several other airlines in the region also lack fuel price hedging measures or faced challenges despite them. AirAsia lost over USD 130 million in Q2. The Philippines' PAL Holdings reported a net loss of 6,12 billion pesos (nearly USD 98 million) in Q2, reversing a net profit of 3,33 billion pesos in the same period last year. Singapore Airlines also implemented fuel hedging but could not avoid a net loss of 75,8 million Singapore dollars (USD 59,6 million) in Q2, compared to a profit of over 186 million Singapore dollars in the same period last year. While Singapore Airlines' hedging activities helped mitigate the impact of spot fuel prices, which had more than doubled, rising non-fuel costs also put pressure on the airline's financial performance.
Tu Anh (according to Nikkei)
