The Zhitong Finance App learned that Citibank released a research report stating that it downgraded the rating of China Eastern Airlines (00670) from “buy” to “sell”, the target price was lowered from HK$2.53 to HK$1.7, the China Southern Airlines (01055) rating was downgraded from “buy” to “neutral”, and the target price was cut from HK$3.8 to HK$2.8. Although the bank maintained the “buy” rating of Air China (00753) and ranked it as the first choice, it reduced the target price from HK$5.35 to HK$3.8.

According to the report, the mainland aviation industry showed characteristics of high volume and weak prices this summer. According to CAAC statistics, passenger traffic increased 12% year over year, 18% higher than in 2019. International capacity rebounded to 77% in 2019, but the rate at which prices returned to normal far exceeded expectations. The average price of economy class after tax is 11% lower than last year. Citi mentioned that the industry's profitability in Asia is also facing challenges. The three major airlines were conservative in their capacity allocations in July of this year, but outbound capacity recovered strongly. Overall, the industry's performance in the summer was a bit disappointing. Furthermore, judging from the results for the second quarter, demand for business travel is still weak, and may not be able to support prices in the off-season in the face of increased capacity.