China Eastern Airlines Controlling Shareholder Plans to Increase Holdings by Up to 1 Billion Yuan! Institutions: Focus on Aviation Oversold Opportunities Brought by Oil Price Impact

After experiencing a sustained decline in stock prices, China Eastern Airlines’ controlling shareholder, China Eastern Air Holding Group Co., Ltd. (referred to as China Eastern Group), announced a plan to increase its holdings by up to 1 billion RMB.

This move comes amid a nearly 25% drop in China Eastern Airlines’ stock price over the past month, and a systemic correction of nearly 19% in the entire airline transportation sector since February. Notably, while institutional opinions on the short-term prospects of the airline sector are mixed, the general belief that the industry’s long-term outlook remains positive has not changed. However, some institutions are paying attention to opportunities created by the sharp decline caused by oil price shocks.

According to an announcement from China Eastern Airlines on March 13, China Eastern Group has increased its holdings of the company’s A-shares by 33.97 million shares through centralized bidding, representing 0.15% of the company’s total equity. Over the next 12 months from the date of this increase, China Eastern Group plans to continue increasing its holdings of A-shares, with a total additional investment (including this purchase) of no less than 500 million RMB and no more than 1 billion RMB. The funds for this increase will come from its own and raised capital. Before this plan, China Eastern Group and its concerted parties held a total of 12.095 billion shares, accounting for 54.76% of the company’s total equity.

The increase by China Eastern Group’s controlling shareholder occurs against a backdrop of persistent stock price weakness. Data from Tonghuashun shows that China Eastern Airlines’ stock has been declining since February 10, falling from a closing price of 6.39 RMB on February 9 to 4.68 RMB on March 16, a decrease of 26.76%.

In fact, the continuous decline in China Eastern Airlines’ stock price is not an isolated case but part of a systemic correction across the sector. Since February 10, the airline transportation sector index from Tonghuashun has fallen by 18.89%, with China National Aviation Holding Corporation (Air China) down 21.5%, Spring Airlines down 18.74%, and Juneyao Airlines down 22.33%.

Market analysis suggests that the ongoing decline in airline stocks is mainly driven by geopolitical conflicts and a surge in international oil prices.

Since late February 2026, tensions in the Middle East have impacted the airline sector. CITIC Securities research reports that the Middle East situation has already affected the global air transport market, forcing many airlines to suspend operations and cancel flights, directly leading to a reduction in global air freight capacity.

At the same time, geopolitical conflicts have caused a sharp rise in crude oil prices. Since March, domestic crude oil futures prices have increased by nearly 60%, reaching a four-year high; Brent crude futures have risen over 40%. Relevant research indicates that fuel costs are the largest single operating expense for airlines, typically accounting for 30% to 40% of total costs.

Under this pressure, China Eastern Airlines’ controlling shareholder has initiated a share increase plan. The Daily Economic News found that, besides this increase, many companies in the airline sector have implemented buybacks or additional holdings. For example, Spring Airlines is currently executing a share repurchase plan with a total amount of 300 to 500 million RMB. Huaxia Airlines announced on March 5 that it completed a buyback plan, using about 160 million RMB to repurchase 1.2% of its shares. Air China is implementing a private placement plan to its controlling shareholder and related parties, aiming to raise no more than 20 billion RMB.

Despite the complex market environment, institutional opinions are mixed, but most believe the long-term outlook remains positive, with some highlighting short-term oversold opportunities.

CITIC Securities’ research reports that January 2026 saw a strong start for air freight demand. According to IATA’s monthly data for January 2026, global air freight demand (measured in cargo tonne-kilometers, CTK) increased by 5.6% year-on-year (international demand up 7.2%). Capacity (available cargo tonne-kilometers, ACTK) grew by 3.6% year-on-year (international capacity up 5.7%). However, the resilience of air freight in the coming months will continue to be tested.

CITIC Securities also suggests paying attention to opportunities for oversold airline stocks driven by oil price shocks. In the short term, the sector is experiencing a tug-of-war between bullish and bearish factors. Once oil prices stabilize or trend top out, a new upward cycle may begin. High oil prices are disrupting stock prices while increasing costs for airlines; however, improving travel demand during the second half of March and the positive momentum from the Spring Festival travel period could keep demand from cooling off seasonally. In the long run, the positive cycle of volume and price in civil aviation is gradually emerging, with high passenger load factors and industry initiatives against internal competition potentially driving sector growth beyond expectations.

Long-term, CITIC Securities is optimistic about the airline sector’s fundamentals, citing slow growth in domestic capacity deployment and continued moderate demand recovery, which could push passenger load factors to new highs and support rising ticket prices. International markets are expected to benefit from visa-free policies and outbound business travel, with demand potentially exceeding expectations and supporting sustained volume and price growth.

Guotai Haidong Securities recommends seizing the contrarian opportunities presented by geopolitical and oil price fluctuations, positioning for a long-term super cycle in the airline industry. According to their report, China’s aviation industry has entered a “super cycle” of profitability driven by market-oriented ticket pricing and continued favorable supply-demand dynamics. Recent geopolitical risks highlight that actual oil price impacts depend on supply and demand, but do not alter the long-term value and logic of airline companies.

Disclaimer: This content and data are for reference only and do not constitute trading advice. Please verify before acting. Use at your own risk.

Cover image source: Meiri Media Asset Library