The Zhitong Finance App learned that China Merchants Securities released a research report saying that the operating data of various airlines in the first quarter was impressive: 1) judging from passenger recovery, China Air China and Spring Airlines saw the biggest increase in passenger traffic, exceeding 30% in the same period in '19; 2) Judging from passenger occupancy rates, listed airlines have approached or recovered to pre-pandemic levels. Spring Airlines reached 91.2%, leading the industry, followed by Juneyao Airlines at 85.5%. Looking ahead to the full year of 2024, with the restoration of international flights and the easing of oversupply pressure in domestic supply, airline passenger occupancy rates are expected to further recover, and profit flexibility brought about by peak season ticket price flexibility is expected to be further evident.

Recommended attention: 1) Spring Airlines (601021.SH), Juneyao Airlines (603885.SH). Small and medium-sized airlines have benefited from the recovery of the domestic market, and their performance is relatively certain. 2) Air China (601111.SH), China Southern Airlines (600029.SH). It is expected to benefit from the resumption of international flights this year and next, showing flexibility in performance.

The views of China Merchants Securities are as follows:

Demand for civil aviation increased markedly in the first quarter. Passenger volume reached a record high for the same period, and the recovery of international travelers accelerated.

According to the Civil Aviation Administration, the entire industry completed a total of nearly 180 million passenger traffic in the first quarter, the highest passenger traffic in the first quarter of the year, up 37.7% year on year, up 10.2% from the same period in 2019; of these, domestic routes completed 160 million passengers, an increase of 14.3% over the same period in 2019; international routes completed 14.120 million passengers, and the scale recovered to 78.0% in the same period in 2019. Looking at turnover: 1) The passenger turnover of domestic aviation in 2024Q1 increased by 8.6% compared to Q1 in 2019, with an average regular passenger occupancy rate of 82.1%, down 1.7 percentage points from 2019Q1; 2) The sharp increase in domestic civil aviation demand drove national aviation demand to exceed the same period in 2019. Even during the low demand season in March, domestic civil aviation passenger turnover increased 15.7% compared to the same period in 2019; 3) Demand for international civil aviation showed a significant month-on-month recovery, with significant month-on-month recovery. International civil aviation passenger turnover in 2024Q1 increased 32.4% month-on-month compared to 2023Q4, and the increase exceeded the month-on-month increase in domestic civil aviation passenger turnover.

The May Day holiday is coming soon. Focus on holiday catalysis.

Since January-April, domestic civil aviation demand has been stronger during the peak season and weaker in the off-season, and domestic ticket price performance has been weak after the Spring Festival holiday. The May Day holiday is approaching. According to flight manager's forecasts, the average daily flight volume during the May Day holiday in 2024 is expected to increase 4.6% from 2019 and 3.3% from the May Day holiday in 2023; the average daily passenger volume of civil aviation during the May Day holiday in 2024 is about 2,088 million, which is expected to increase about 15.6% from 2019 and 11.0% from 2023; in terms of ticket prices, the average domestic air ticket (economy class) price is expected to be 890 yuan during the May Day 2024 period, down 10% from 2023 and up 19% from 2019.

The airline's profit flexibility is expected to be further unleashed.

The operating data of various airlines in the first quarter was impressive: 1) Judging from passenger recovery, Air China and Spring Airlines saw the biggest increase in passenger traffic, exceeding 30% in the same period in '19; 2) In terms of passenger occupancy rates, listed airlines have approached or recovered to pre-pandemic levels. Spring Airlines reached 91.2%, leading the industry, followed by Juneyao Airlines at 85.5%. Looking ahead to the full year of 2024, with the restoration of international flights and the easing of oversupply pressure in domestic supply, airline passenger occupancy rates are expected to further recover, and profit flexibility brought about by peak season ticket price flexibility is expected to be further evident.

Recommended attention: 1) Spring Airlines, Juneyao Airlines. Small and medium-sized airlines have benefited from the recovery of the domestic market, and their performance is relatively certain. 2) Air China and China Southern Airlines. It is expected to benefit from the resumption of international flights this year and next, showing flexibility in performance.

Risk warning: The macroeconomy fell beyond expectations; oil prices rose sharply, RMB depreciated sharply; flight recovery fell short of expectations.