China’s three largest state-owned airlines reported a combined first-half net loss of approximately 8.2 billion yuan ($1.22 billion), extending their deficit streak to seven consecutive years despite roughly 10% revenue growth. Air China lost 2.3 billion yuan, China Eastern Airlines lost 2.2 billion yuan and China Southern Airlines posted a 3.7 billion yuan deficit. The result reversed their combined first-quarter profit of 4.82 billion yuan, which had benefited from Lunar New Year travel, as the second quarter brought a combined loss of about 13 billion yuan. Jet fuel was the main pressure point: prices rose from about 5,600 yuan per ton at the start of 2026 to as high as 9,800 yuan, while combined fuel spending reached 96.8 billion yuan, nearly 40% of revenue. Limited hedging left the carriers exposed to the price surge. Passenger volume across the industry still rose 1% to 3.8 billion trips in the first half, but operating costs outpaced revenue at Air China and China Eastern. An unusually active typhoon season disrupted peak summer travel, while weaker economic conditions and competition from high-speed rail and road trips constrained domestic fares. HSBC analysts expect the three carriers to report combined losses of about 16.8 billion yuan for 2026, compared with a market consensus for a 1.3 billion yuan profit. Their Shanghai-listed shares have each fallen at least 36% this year, and none declared an interim dividend. The airlines continued expanding their COMAC C919 fleets, although China Eastern reduced its expected deliveries for 2026 to 2028 by 13 aircraft.