Matters:
The aviation companies disclosed the operation data of April 2022. The epidemic situation in Shanghai fell back after reaching a high level, and the epidemic situation in the whole country was still sporadic. The bottom of civil aviation passenger flow was silent in April, and the impact degree was close to or even higher than the initial stage of the epidemic in February 2020. The passenger flow of the three major airlines and spring and autumn decreased by more than 80%, and the passenger flow of Juneyao Airlines Co.Ltd(603885) decreased by 93%. In May, the epidemic situation in Shanghai continued to decline, the epidemic situation in various places was basically controllable, and the number of civil aviation flights picked up.
The Civil Aviation Administration held a working meeting on the normal operation and service quality of civil aviation flights and the deployment meeting on operation guarantee in thunderstorm season, pointing out that it should actively take effective measures to meet the operating needs of airlines as far as possible, achieve “flying as far as possible”, fully consider the difficult situation of enterprises, accelerate the implementation of rescue policies such as emergency loans and China’s passenger flight operation subsidies, help the safe development of the industry, and look forward to the implementation of relevant policies.
The policy level currently adheres to the “dynamic clearing” unswervingly, and the occasional epidemic may still have an impact on the operation of civil aviation. However, after the end of this round of epidemic, the normalized nucleic acid testing in major cities across the country is gradually implemented, and we are expected to stop the spread of local epidemic more quickly. Although the upper limit of travel recovery after normalization remains to be seen, its stability is expected to rise to a higher level.
In the long run, despair breeds hope, the impact of the epidemic will eventually pass, and we will see the civil aviation industry bloom again in the future. At present, the core pain point of civil aviation is that the demand is continuously suppressed by the epidemic. We cannot judge when the epidemic prevention policy will change, but if we choose to liberalize one day, the demand for civil aviation is expected to recover rapidly. On the supply side, the annual growth rate of the number of civil aviation transport aircraft was 10.1% from 2011 to 2019, while in 20202021, which was under great pressure, the airlines significantly reduced the introduction of transport capacity, and the growth rate of civil aviation transport aircraft was only 2.2% and 1.7% respectively. In 2022, from the perspective of fleet introduction planning of each aviation company, if b737max go around is not considered, the number of aircraft introduced during the year is only 3.6%. If the epidemic situation repeats, the actual introduction speed may be further reduced.
The continuous low growth of transport capacity creates preconditions for the reversal of supply and demand, and the current fare reform continues to advance. The ceiling of economy class full price tickets on the core public and business trunk lines is constantly pushed up, which also accumulates flexibility for the freight rate after the reversal of supply and demand in the future. We believe that if demand recovers one day, the upward elasticity of civil aviation freight rates is large, and the performance is expected to reach a record high.
We continue to be optimistic about the reversal of civil aviation supply and demand after the impact of the epidemic subsides. Stimulated by the resonance of continuous introduction of low transport capacity, fare reform and historical high seating rate, civil aviation performance is expected to reach a record high. We continue to recommend sector industry investment opportunities and recommend Air China Limited(601111) , China Southern Airlines Company Limited(600029) , China Eastern Airlines Corporation Limited(600115) , Spring Airlines Co.Ltd(601021) , Juneyao Airlines Co.Ltd(603885) .
Comments:
Each airline company disclosed the operation data in April 2022
The aviation companies disclosed the operation data of April 2022. The epidemic situation in Shanghai fell back after reaching a high level, and the epidemic situation in the whole country was still sporadic. The bottom of civil aviation passenger flow was silent in April, and the impact degree was close to or even higher than the initial stage of the epidemic in February 2020. The passenger flow of the three major airlines and spring and autumn decreased by more than 80%, and the passenger flow of Juneyao Airlines Co.Ltd(603885) decreased by 93%. In May, the epidemic situation in Shanghai continued to decline, the epidemic situation in various places was basically controllable, and the number of civil aviation flights picked up.
In terms of China’s shipping line, the investment of the three major shipping lines decreased by about 80%, China Southern Airlines decreased by 74.5%, China Eastern Airlines was greatly affected by the epidemic in its main base Shanghai, with a decrease of 87.5%, 76.0% in spring and autumn, and 91.7% in auspicious. In terms of traffic volume, the passenger turnover of the three major airlines on the China line decreased by more than 80% year-on-year, the same decline of more than 80% in spring and autumn, and the decline of auspicious reached 94.1%. In terms of passenger seat rate, except that the passenger seat rate remained above 60% in spring and autumn, which was 66.8%, the passenger seat rate of all airlines was generally less than 60%, with a year-on-year decrease of about 20 percentage points.
As the “five ones” policy has not been significantly loosened, the national door has not been fully opened yet, the international line operation and traffic volume of each shipping company is still at a low ebb, and the international line operation and traffic volume of each shipping company has not improved significantly compared with 2019.
The bail-out policy is expected to promote business recovery, and the long-term prospect is still good
The Civil Aviation Administration held a working meeting on the normal operation and service quality of civil aviation flights and the deployment meeting on operation guarantee in thunderstorm season, pointing out that it should actively take effective measures to meet the operating needs of airlines as far as possible, achieve “flying as far as possible”, fully consider the difficult situation of enterprises, accelerate the implementation of rescue policies such as emergency loans and China’s passenger flight operation subsidies, help the safe development of the industry, and look forward to the implementation of relevant policies.
The policy level currently adheres to the “dynamic clearing” unswervingly, and the occasional epidemic may still have an impact on the operation of civil aviation. However, after the end of this round of epidemic, the normalized nucleic acid testing in major cities across the country is gradually implemented, and we are expected to stop the spread of local epidemic more quickly. Although the upper limit of travel recovery after normalization remains to be seen, its stability is expected to rise to a higher level.
In the long run, despair breeds hope, the impact of the epidemic will eventually pass, and we will see the civil aviation industry bloom again in the future. At present, the core pain point of civil aviation is that the demand is continuously suppressed by the epidemic. We cannot judge when the epidemic prevention policy will change, but if we choose to liberalize one day, the demand for civil aviation is expected to recover rapidly. On the supply side, the annual growth rate of the number of civil aviation transport aircraft was 10.1% from 2011 to 2019, while in 20202021, which was under great pressure, the airlines significantly reduced the introduction of transport capacity, and the growth rate of civil aviation transport aircraft was only 2.2% and 1.7% respectively. In 2022, from the perspective of fleet introduction planning of each aviation company, if b737max go around is not considered, the number of aircraft introduced during the year is only 3.6%. If the epidemic situation repeats, the actual introduction speed may be further reduced.
The continuous low growth of transport capacity creates preconditions for the reversal of supply and demand, and the current fare reform continues to advance. The ceiling of economy class full price tickets on the core public and business trunk lines is constantly pushed up, which also accumulates flexibility for the freight rate after the reversal of supply and demand in the future. We believe that if demand recovers one day, the upward elasticity of civil aviation freight rates is large, and the performance is expected to reach a record high.
Investment suggestions:
We continue to be optimistic about the reversal of civil aviation supply and demand after the impact of the epidemic subsides. Stimulated by the resonance of continuous introduction of low transport capacity, fare reform and historical high seating rate, civil aviation performance is expected to reach a record high. We continue to recommend sector industry investment opportunities and recommend Air China Limited(601111) , China Southern Airlines Company Limited(600029) , China Eastern Airlines Corporation Limited(600115) , Spring Airlines Co.Ltd(601021) , Juneyao Airlines Co.Ltd(603885) .
Risk tips:
Macroeconomic downturn, repeated epidemics, sharp fluctuations in oil prices and exchange rates, and safety accidents
