JPMorgan released a research report stating that while the pace is still slow, China's airlines are continuing to recover. Expectations for the three major airlines in mainland China have been adjusted accordingly based on the strong data from past holidays such as the Dragon Boat Festival, as well as anticipation for the upcoming summer season.

The bank stated that outbound travel data during several long holidays this year has all shown strong recovery, and the advance booking levels for the upcoming summer travel season starting next month are also encouraging. This has led to a good performance of the aviation industry over the past month, slightly outpacing the MSCI China index by about 5 percentage points.

JPMorgan pointed out that the decline in airfare prices this year has been more moderate than expected. With the transfer of more profitable international flights, it is believed that there will be a positive impact on the average pricing and profitability of airlines, although some of it will be offset by cost pressures, aircraft leasing expenses, maintenance, and rising overseas airport fees. JPMorgan has lowered the target price of Air China (00753.HK) from HKD 6.8 to HKD 5.6, China Eastern Airlines (00670.HK) from HKD 3.2 to HKD 2.7, and China Southern Airlines (01055.HK) from HKD 5 to HKD 4.2 while maintaining a "shareholding" rating for all three. The bank believes that the industry's valuation is highly attractive, with investment returns higher than the long-term average.

JPMorgan has raised profit forecasts for Air China by 8.2% and 46% for 2021 and 2022, respectively, while increasing those of China Southern Airlines by 107.7% and 110.3%. The bank has lowered profit forecasts for China Eastern Airlines by 35.3% in 2021 but increased it by 14.9% in 2022. The bank continues to be bullish on the aviation/airlines industry and recommends investing in Air China and Spring Airlines (601021.SH) in particular.