Guangfa Securities: 26-year aviation industry Q1 passenger load factor outstanding, April demand resilience continues, supply margin tightening

Guangfa Securities released a research report stating that in the first quarter, the three major airlines saw a year-on-year increase in supply and demand of 7.4% and 10.3% respectively, with passenger load factor increasing by 2.3 percentage points to 85.5%, a 3.1 percentage point increase from 2019. Ticket prices also increased year-on-year, with impressive pre-sale data for the Labor Day holiday. In the context of high oil prices, airlines proactively reduced some inefficient capacity, leading to marginal shrinkage on the supply side and continued improvement in industry competition. Overall, demand remains resilient, holiday demand is high, coupled with capacity reduction, the industry's supply-demand situation is marginally improving, and ticket prices are improving. Since the adjustment of stock prices and valuation following the rise in oil prices due to the US-Iran conflict in March, the sector is currently at relatively low levels, and there may be opportunities for contrarian investment.