Air China Q3 2026: revenue rises but jet fuel costs crush profit

Air China Limited published its third-quarter report on 30 October 2026, covering the three and nine months ended 30 September 2026.

The headline is uncomfortable. Revenue and passenger traffic continued to grow, but a steep increase in jet fuel costs pushed the group into a nine-month loss and almost wiped out third-quarter profit.

The full figures are available in the original company announcement. The quarterly financial statements were unaudited and prepared under PRC Accounting Standards for Business Enterprises.

Air China’s Q3 2026 key figures

Metric	Q3 2026	Year-on-year change
Revenue	RMB51.70 billion	5.35%
Total profit	RMB85.7 million	-97.93%
Profit attributable to shareholders	RMB270.6 million	-92.64%
Profit excluding non-recurring items	RMB62.7 million	-98.28%
Basic earnings per share	RMB0.02	-90.91%
Passenger load factor	86.0%	+3.7 percentage points
Passengers carried	45.88 million	7.3%

Revenue growth looks respectable in isolation. Unfortunately, it did not translate into meaningful earnings.

Air China reported RMB270.6 million of quarterly profit attributable to shareholders, but RMB207.9 million of non-recurring gains contributed to the result. Once those items were removed, underlying profit was just RMB62.7 million.

Analyst calculation: Q3 profit margins

Using reported revenue of RMB51.70 billion:

• Reported attributable profit margin: RMB270.6 million divided by RMB51.70 billion = approximately 0.52%.
• Profit margin excluding non-recurring items: RMB62.7 million divided by RMB51.70 billion = approximately 0.12%.

These are my calculations rather than company guidance. They show how little room was left after costs, despite the higher revenue.

Higher fuel costs overwhelmed traffic growth

Management directly attributed the deterioration in profit to a steep rise in oil prices, which significantly increased jet fuel costs.

For the first nine months, operating income increased 8.58% to RMB140.96 billion. However, operating costs rose from RMB120.66 billion to RMB138.75 billion, an increase of approximately 15.0% by my calculation.

That mismatch matters. Revenue grew, but the direct cost base grew much faster. Total operating costs, including selling, administrative, research and finance expenses, reached RMB151.16 billion. The group consequently recorded an operating loss of RMB3.47 billion, compared with a RMB1.22 billion operating profit in the corresponding period of 2025.

Air China’s efforts to improve operating quality and efficiency were therefore not enough to offset fuel-price pressure.

Passenger demand was a clear positive

The operating statistics were considerably stronger than the profit figures.

During the first nine months of 2026, Air China carried 125.58 million passengers, up 4.8%. Revenue passenger kilometres, or RPKs, increased 7.9%. RPK measures the number of paying passengers carried multiplied by the distance flown.

Available seat kilometres, or ASKs, rose by a slower 2.9%. ASK measures the number of seats available for sale multiplied by the distance flown.

When passenger traffic grows faster than available capacity, aircraft are generally being filled more effectively. Air China’s nine-month passenger load factor improved by 3.9 percentage points to 85.2%.

International operations were particularly strong:

• International passenger traffic measured by RPK increased 14.9%.
• International capacity measured by ASK rose 6.3%.
• The international passenger load factor improved 6.2 percentage points to 83.8%.
• International passenger numbers increased 8.1% to 15.03 million.

Third-quarter passenger numbers rose 7.3% to 45.88 million, while the quarterly passenger load factor reached 86.0%.

That is encouraging operational progress. The problem is that stronger aircraft utilisation did not protect profitability from the fuel-cost increase.

Nine-month losses and weaker operating cash flow

For the nine months ended 30 September, Air China reported a net loss attributable to shareholders of RMB2.02 billion. That compared with a RMB1.87 billion profit in the same period of 2025.

The loss excluding non-recurring items was wider at RMB2.72 billion. Basic and diluted losses per share were both RMB0.11.

Operating cash flow remained positive at RMB25.62 billion, although it fell 24.8% year on year. Meanwhile, cash paid for fixed assets, intangible assets and other long-term assets more than doubled to RMB24.48 billion from RMB10.75 billion.

Analyst calculation: operating cash after capital spending

RMB25.62 billion of operating cash flow minus RMB24.48 billion of asset investment leaves approximately RMB1.14 billion.

This is a simplified calculation, not a company-reported free cash flow measure. It nevertheless highlights how the investment programme absorbed almost all operating cash generated during the period.

Cash and cash equivalents fell by RMB4.05 billion during the nine months, ending September at RMB10.25 billion.

The share issue strengthened equity

Owners’ equity attributable to shareholders increased 40.67% from the end of 2025 to RMB59.86 billion. Air China said this was due to issuing shares to specific investors.

The cash-flow statement recorded RMB21.45 billion received from capital injections. Total liabilities declined from RMB303.82 billion to RMB296.29 billion, while total assets increased 2.84% to RMB352.80 billion.

This is a meaningful improvement in reported equity, although investors should remember that issuing new shares increases the share base. Paid-up capital rose from RMB17.45 billion to RMB20.49 billion, an increase of approximately 17.4% by my calculation. A larger share base can dilute existing investors’ proportionate ownership and makes per-share performance especially important.

Liquidity also deserves attention. Current assets stood at RMB36.16 billion against current liabilities of RMB113.84 billion, leaving a gap of approximately RMB77.68 billion. The capital injection improves the broader balance-sheet position, but it does not remove the need to monitor cash, borrowing and near-term obligations.

What investors should watch next

Air China’s traffic data show that demand, particularly on international routes, is moving in the right direction. Capacity growth has remained below passenger traffic growth, helping load factors improve.

The financial outcome was still weak. Q3 remained profitable, but only narrowly once non-recurring items were excluded. Across the first nine months, the group moved from profit to loss despite higher revenue.

The next reporting period will need to show whether Air China can convert its stronger passenger volumes and load factors into sustainable earnings. Jet fuel costs are the central pressure point, while operating cash flow, capital expenditure and the enlarged share base are also important measures to follow.