Singapore media Lianhe Zaobao recently published an article stating that China's three major state-owned airlines reported losses in the first half of the year (January-June) for the 7th consecutive year, due to soaring fuel prices. According to reports from Reuters and China Securities Journal, among others, the combined net losses of Air China, China Eastern Airlines, and China Southern Airlines in the first half of the year amounted to approximately 8.2 billion yuan (approximately 195.16 billion yen). The three companies had warned in July that their losses could reach a maximum of 9 billion yuan (approximately 214.2 billion yen). This loss contrasted with the 4.82 billion yuan (approximately 114.716 billion yen) profit they posted in the first quarter (January-March), supported by strong demand during the Spring Festival (Lunar New Year) period, and on August 31, the share prices of the three companies fell in mainland China and Hong Kong markets. According to Air China's interim results announced on August 30, its net loss was 2.286 billion yuan (approximately 54.4068 billion yen), an increase from the net loss of 1.806 billion yuan (approximately 42.9828 billion yen) in the same period last year. China Eastern Airlines also announced on the same day that its net loss amounted to 2.179 billion yuan (approximately 51.8602 billion yen). The net loss in the same period last year was 1.431 billion yuan (approximately 34.0578 billion yen). China Southern Airlines announced on August 28 that its net loss was 3.696 billion yuan (approximately 87.9648 billion yen). This is more than double the net loss of 1.533 billion yuan (approximately 36.4854 billion yen) in the same period last year. Against the backdrop of geopolitical conflicts in the Middle East, aviation fuel prices remained high in the first half of the year, significantly squeezing airlines' profit margins. The fuel costs for the three companies increased by 35% to 38%. China Eastern Airlines stated that disruptions to international routes related to the Middle East conflict and soaring aviation fuel prices had dealt a 'severe blow' to its earnings environment. Chinese airlines, unlike many of their Asian and European counterparts, have largely not hedged their fuel purchases, making them vulnerable to fluctuations in crude oil prices. China Southern Airlines stated that 'no effective means exist' to manage the risk of fluctuations in aviation fuel prices. Driven by rising international demand, the companies saw strong revenue performance in the first half of the year, with Air China up 10.5%, China Eastern Airlines up 11.1%, and China Southern Airlines up 9.7%. While the third quarter (July-September) is typically the most profitable period for Chinese airlines, unseasonably strong typhoons have affected domestic flights during the summer peak travel season. According to meteorological data, 21 typhoons have formed in the Northwest Pacific and South China Sea so far this year, exceeding the historical average for the same period by nine. Aviation data company Flight Master predicted that the number of domestic and international passengers for Chinese airlines in July and August would decrease by 3.6% year-on-year to 142 million, marking the first decline in a peak season since 2022. Analysts at HSBC expect that the three companies will report a combined loss of approximately 16.8 billion yuan (approximately 399.84 billion yen) in 2026. This contrasts with market expectations of a combined profit of 1.3 billion yuan (approximately 30.94 billion yen).