Air China's net profit fell 92.6% in the third quarter to 270.6 million yuan, the Beijing-based flag carrier said Thursday, as a surge in jet fuel costs consumed almost all of the gains from a crowded summer travel season.

The result is the first look at how China's three big state-controlled airlines fared in the July-to-September peak travel season. A year ago, Air China earned 3.68 billion yuan in the third quarter alone, more than its entire nine-month profit of 1.87 billion yuan, according to figures reported by the Chinese outlet Jiemian at the time. For investors who hold the carriers' Hong Kong-listed H shares, the numbers suggest the fuel shock behind heavy first-half losses was still biting through the peak. Cathay Pacific Airways owns 12.85% of Air China, according to the shareholder table in the quarterly report.

Air China's revenue grows, but costs grow faster

Revenue for the quarter rose 5.4% to 51.7 billion yuan, the company said in a filing to the Hong Kong stock exchange. Pretax profit collapsed 97.9% to 85.7 million yuan. One-off items added a net 208 million yuan in the quarter, most of it other non-operating income. Stripping them out, net profit attributable to shareholders was just 62.7 million yuan, down 98.3%.

Air China blamed the "steep rise in oil price," which it said had sharply increased its jet fuel bill and driven large year-on-year swings in its profit measures.

The nine-month figures show the scale of the squeeze. Revenue rose 8.6% to 140.96 billion yuan, while operating costs climbed 15% to 138.7 billion yuan. Air China swung to a net loss attributable to shareholders of 2.02 billion yuan, from a profit of 1.87 billion yuan a year earlier. Net cash from operations fell 24.8% to 25.6 billion yuan.

The pressure is not unique to Air China. Reuters reported in August that fuel costs rose between 35% and 38% at each of the three biggest Chinese carriers in the first half, and that jet fuel prices were still more than 50% above their levels before the Middle East conflict. The agency also noted that Chinese carriers do little fuel hedging compared with many Asian and European peers, so swings in oil prices feed more directly into their costs. Brent was trading near a six-month high as recently as Monday.

Fuller planes, thinner margins

Demand itself held up. Air China and its subsidiaries, which include Shenzhen Airlines, Shandong Airlines and Air Macau, carried 45.9 million passengers in the quarter, up 7.3%. Passenger traffic measured in revenue passenger kilometers rose 9.8%, almost twice the 5.1% increase in seat capacity, lifting the passenger load factor to 86%, up 3.7 percentage points.

International routes did the heavy lifting. International traffic grew 16.5% in the quarter and international passengers rose 9.8% to 5.44 million. Domestic passengers increased 7.4% to 39.2 million.

Yet revenue rose only about half as fast as passenger traffic. The report does not break out fares, and revenue also includes cargo, so any reading on pricing is an inference rather than a disclosed figure: the gap suggests Air China took in less on average for each kilometer a passenger flew than a year earlier. In September alone, the load factor was 85.2% by the quarterly report's updated count, slightly below the 85.4% in the monthly operating data released Oct. 15, and the group ended the month with 974 aircraft.

Balance sheet repair, and two rivals next

Air China does have a stronger cushion than a year ago. Owners' equity attributable to shareholders rose 40.7% from the end of 2025 to 59.9 billion yuan after the company sold new shares to specific investors. The airline proposed the placement in October 2025, aiming to raise up to 20 billion yuan from its state parent group to repay debt and fund working capital, Jiemian reported then.

Financing costs came down too. Finance expenses for the nine months fell 32.5% to 2.54 billion yuan, as interest expense dropped to 3.48 billion yuan from 4.25 billion yuan. Total liabilities equaled about 84% of assets at the end of September, down from roughly 89% at the end of 2025, by Capital Times' calculation from the balance sheet. Cash and bank balances fell to 11.7 billion yuan from 15.9 billion yuan over the same period.

The third-quarter profit did little to dent the first-half hole. Air China lost 2.3 billion yuan in the first six months, and the three big carriers lost about 8.2 billion yuan combined, according to Reuters. HSBC analysts at the time forecast a combined 2026 loss of about 16.8 billion yuan for the three, against a market expectation of a 1.3 billion yuan profit.

China Eastern Airlines and China Southern Airlines hold board meetings on Friday, Oct. 30, to approve their own third-quarter results, according to exchange filings, and China Eastern said it will publish its report on the Shanghai Stock Exchange the same day. China Southern, which posted the largest first-half loss of the three at 3.7 billion yuan, plans to publish its report on Oct. 31 and will take investor questions at an online results briefing on Nov. 2 from 2 p.m. to 3 p.m. Beijing time. China Eastern's briefing follows on Nov. 3 at 11 a.m.