China’s three largest state-owned carriers—Air China, China Eastern, and China Southern—forecast combined first-half 2026 losses of up to $1.3 billion, a sharp widening from the $700 million loss in the same period last year. Q2 fuel-cost surges, driven by Middle East geopolitical conflict since March 2026, erased Q1 profits of RMB 4.8 billion, with estimated Q2 losses exceeding RMB 10 billion. China Southern faces the steepest deficit at RMB 3.47–3.97 billion, while Air China and China Eastern project RMB 2.1–2.6 billion and RMB 1.8–2.4 billion losses respectively. HSBC now forecasts full-year 2026 losses of RMB 16.8 billion, contradicting prior market expectations of a RMB 1.3 billion profit. Rising jet fuel prices and disrupted Japan routes compound margin pressure as operators enter peak summer travel.