In depth report on the transportation industry: the road to Nirvana, with a promising prospect: foresee the recovery and lay out the air transportation in the second series of reports after the epidemic

Introduction

Covid-19 epidemic has a profound impact on the global economy. Under the influence of prevention and control policies, repeated epidemics, economic downturn and other factors, personal travel, tourism and other needs have been impacted. The global epidemic is coming to an end, and industries seriously affected by the epidemic are expected to usher in an inflection point. Please pay attention to the series of in-depth reports of the large consumption team of East Asia Qianhai securities "anticipating recovery and layout after the epidemic".

Core view

Civil aviation freight demand recovers before passenger demand. International passenger routes are less affected by the epidemic prevention and control policies. Both passenger and freight transport on Chinese routes have benefited from the recovery of Chinese demand and the improvement of the epidemic, and the recovery momentum is good. 1) The recovery of international passenger transport is slower than that of China. From 2020 to 2021, the supply and demand of China's airline passenger transport continued to repair, but it was dragged down by the multi-point spread of China's epidemic in the second half of 2021; The supply and demand of international and regional passenger routes continued to be sluggish. 2) The recovery of international and Chinese freight transportation is good. China's freight supply has continued to warm up from the first half of 2021 to the second half of 2020, but it has continued to warm up since 2021; The supply and demand of freight on international and regional routes continued to repair, surpassing the pre epidemic level in most months of 2021.

The relaxation of prevention and control policies will accelerate the recovery of the industry. On March 9, 2020, civil aviation began to implement the "five ones" policy, and then began to implement the flight circuit breaker policy at the end of 2020, which suppressed the demand and supply of international flight passenger transport. Under the trend of orderly relaxation of prevention and control policies, the performance of airlines is expected to rebound rapidly. In 2021, the global epidemic was initially controlled, and the scope and intensity of the epidemic decreased. The United States and Japan gradually relaxed their entry-exit policies. The airlines of the two countries fully benefited from the improvement of the global epidemic, and their revenue rebounded rapidly year-on-year; However, China Airlines is still restricted by relatively strict travel policies, the passenger turnover of international routes has not improved, and the year-on-year growth rate of revenue lags behind that of the United States and Japan Airlines. The 14th five year plan of civil aviation defines 2021-2022 as the recovery period and savings period, while 2023-2025 is the growth period and release period. The focus will be to expand the Chinese market and restore the international market. 2022 may become the turning point for civil aviation to accelerate the upward movement.

The demand for civil aviation freight and passenger transport is expected to grow steadily. It is expected that the passenger transport demand will return to the pre epidemic level in 2024. According to the calculation of the 14th five year plan of civil aviation, the civil aviation passenger transport turnover in 2021 / 2022 / 2023 / 2024 / 2025 is 7399 / 8657 / 10128 / 11850 / 1386.5 billion person kilometers, which is restored to 62% / 73% / 85% / 100% / 117% in 2019 respectively; The civil aviation cargo and mail turnover of 2021 / 2022 / 2023 / 2024 / 2025 is 285 / 305 / 326 / 349 / 37.3 billion ton kilometers, 107% / 115% / 123% / 131% / 140% respectively in 2019.

Investment advice

With the continuous improvement of the epidemic situation and the gradual relaxation of prevention and control policies, the performance flexibility of airlines with high proportion of international routes is large, and the relevant targets include Air China Limited(601111) ; Under the recovery of China's demand, airlines with cost advantage are more competitive, and the related targets include Juneyao Airlines Co.Ltd(603885) .

Risk tips

Fluctuations in crude oil prices; Exchange rate fluctuations; Downstream demand is lower than expected; The disturbance of the epidemic has intensified.

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