Goldman Sachs: Downgrades Air China Limited (00753) and China Southern Airlines (01055) to "Sell"; Prefers Spring Airlines (601021.SH)

Goldman Sachs released a research report stating that its view on China's aviation industry has turned more conservative, mainly due to upward revisions to aviation fuel price forecasts and rising maintenance costs caused by an aging fleet. The bank downgraded the A/H share ratings of Air China Limited (00753) and China Southern Airlines (01055) to "Sell," and downgraded the A/H share rating of China Eastern Airlines (00670) to "Neutral." The bank prefers Spring Airlines (601021.SH) and maintains its "Buy" rating. Goldman Sachs noted that it raised its 2026 aviation fuel price forecast to US$144 per barrel, with forecasts of US$120 per barrel and US$100 per barrel for 2027 and 2028, respectively. As airlines absorb most of the fuel cost increase themselves in order to sustain passenger volume growth, the bank has become more cautious on the industry outlook. The bank believes that Spring Airlines, with its stronger cost control capabilities, younger fleet, and lower earnings sensitivity to fuel prices, is best positioned to cope with the aforementioned industry headwinds.