The Zhitong Finance App learned that Zheshang Securities released a research report saying that air travel volume and prices rose sharply during the summer and National Day holiday seasons, and it is expected that the third quarter will be the starting point for large-scale performance. Based on the continued resumption of international routes driving the continued recovery of aircraft utilization, airline performance is expected to achieve positive year-on-year growth in 2024. We recommend Spring Airlines (601021.SH) /China Southern Airlines (600029.SH) /China Eastern Airlines () /China Eastern Airlines () /Air China () /Air China () /Juneyao Airlines (Vitis) based on expected flexible space and certainty of performance delivery. 600115.SH 601111.SH 603885.SH

The main views of Zheshang Securities are as follows:

Civil aviation industry: Passenger volume in September was -2% year on year 19

Passenger volume: According to flight manager data, the number of passengers carried by civil aviation in September was 53.67 million, -2.0% over the same period in '19.

ASK: Industry ASK in August +5% compared to 19 years

RPK: Industry RPK in August was -1% year on year compared to 19

Attendance rate: The occupancy rate for regular classes in August was about 82%, compared to 19-5 pct

Airlines: Volume and prices are rising during the peak summer season, and the airline's Q3 performance is expected to reach a record high

23Q3 year on year 19Q3 summary:

ASK: Auspicious +24% > Chunqiu +19% > Air China +0.2% > China Eastern Airlines -1% > China Southern Airlines -3%

RPK: Auspicious +23% > Chunqiu +19% > China Southern Airlines -6.7% > China Eastern Airlines -7.5% > Air China -8.2%

Passenger occupancy rate: Spring and Autumn - 0.1 pct > Auspicious - 0.7 pct > China Southern Airlines - 3 pct > China Eastern Airlines - 6 pct > Air China - 7 pct

Net increase in passenger aircraft volume (aircraft) in September: Air China -2, China Southern Airlines +2, China Eastern Airlines +0, Chunqiu+1, Auspicious +0

Supply-side ASK in September compared to year 19:

1) Overall: Auspicious +16% > Chunqiu +6% > China Eastern Airlines -2% > Air China -4.1% > China Southern Airlines -4.2%

2) Domestic flights: Chunqiu +43% > Auspicious +24% > China Eastern Airlines +19% > Air China +16% > China Southern +13%

3) International and regional flights: Jixiang -14% > China Eastern Airlines -39% > Air China -40% > China Southern Airlines -42% > Chunqiu -61%

Demand side RPK in September compared to 19 years:

1) Overall: Auspicious +13% > Chunqiu +6% > China Southern Airlines -8% > China Eastern Airlines -10% > Air China -12%

2) Domestic flights: Chunqiu +43% > Auspicious +21% > China Eastern Airlines +8% > China Southern +7% > Air China +6%

3) International and regional flights: Jixiang -23% > China Southern Airlines -41% > China Eastern Airlines -42% > Air China -46% > Chunqiu -65%

The passenger occupancy rate in September was 19 years on year: the gap narrowed compared to August

1) Overall: Chunqiu - 0.2 pct, Auspicious - 2 pct, China Southern Airlines - 3 pct, China Eastern Airlines - 6 pct, Air China - 7 pct.

2) Domestic flights: Chunqiu - 0.1 pct, Auspicious - 2 pct, China Southern Airlines - 4 pct, Air China - 7 pct, China Eastern Airlines - 8 pct

3) International and regional flights: China Southern Airlines +1 pct, China Eastern Airlines - 4 pct, Jixiang - 7 pct, Air China - 8 pct, Chunqiu - 9 pct

Oil price: According to Wind, in October 2023, China's aviation kerosene import customs value was 8,055 yuan/ton, +8% month-on-month, -0.1% year-on-year, 22-year-on-year, and +59% year-on-year in '19.

Exchange rate: According to Wind, on October 16, the central price of the US dollar to the RMB was 7.1798, +3.1% from the end of '22, and the same as at the end of 23Q3.

Airport: Domestic passenger volume recovered to '19, and the international recovery trend is clear

1) Overall: The number of passengers at Shanghai's two events in September, Guangzhou Baiyun, Beijing Capital, and Shenzhen Bao'an Airport was 870, 526, 482, and 4.28 million respectively, recovering to 87%, 87%, 59%, and 99% in 2019, respectively. Among them, the passenger volume recovery rate at Beijing Capital Airport is relatively low, mainly due to the diversion of Beijing Daxing Airport in '23.

2) Domestic routes: In September, passenger traffic at Shanghai, Baiyun, Guangzhou Baiyun, Beijing Capital, and Shenzhen Bao'an Airport recovered to 102%, 98%, 67%, and 105% of 2019, respectively.

3) International and regional routes: In September, passenger traffic at Shanghai, Baiyun, Guangzhou Baiyun, Beijing Capital, and Shenzhen Bao'an Airport recovered to 59%, 55%, 38%, and 51%, respectively, of 2019.

Risk warning:Travel demand fell short of expectations, oil prices fluctuated greatly, exchange rates fluctuated greatly, and duty-free sales fell short of expectations.