Oil prices continue to lower aviation high-speed trains for the Spring Festival

Compared with the oil companies' "absolute failure", the collapse in oil prices has made major airlines "blessing" and is being stimulated by positive effects. Many aviation stocks have taken off "strongly".

On December 17th, the international crude oil market continued to cloud overcast, and crude oil prices were lower again. Brent crude suffered a major setback, falling below the $60 mark per barrel for the first time since 2009. Compared to the high US$107.68/barrel price in June 2014, international crude oil prices have fallen in just over 5 months. Up to 47%.

Relative to the oil companies' "unpreparedness," the plunge in oil prices has made major airlines "blessed." Thanks to the good stimulus, many aviation stocks took off. On December 17, the A-share aviation sector was gorgeous and red, and Air China (601111, stocks) closed at 7.66 yuan/share, up 5.08%; China Southern Airlines (600029, stocks) closed at 5.61 yuan/share, or 3.12%; East Aviation (600115, stocks) closed at 5.75 yuan / share, or 2.31%.

In an interview with reporters, Air China’s director-general Rao Yuyu said: “The drop in crude oil prices has a positive impact on the company, which in turn reduces fuel costs.”

Zhang Bin, a product analyst at Zhuo Chuang Securities, said in an interview with reporters: “With the drop in international crude oil prices, the cost of aviation kerosene is gradually going down, which is equivalent to saving the airline’s fuel costs.”

Zhang Bin said, “The cost of jet fuel began to decline in July, and the cumulative total should be about 1,250 yuan/ton as of now. It has been adjusted once a month for a total of five adjustments.”

“It is expected that the fuel cost in January 2015 will still drop. The rate of decline should not be too small. It should be in the range of 300 yuan/ton to 400 yuan/ton, or even more. Then the fuel cost should be reduced to 1,600 yuan/year. Ton up and down, so that the cost of fuel for the airline should be very good.” Zhang Bin Road.

The price of jet fuel goes “unending”

On December 12, New York oil prices and Brent oil prices closed at 57.81 US dollars and 61.85 U.S. dollars, respectively, which had fallen to a five-year low. The current market is still worried about the global supply of excess crude oil.

The airline, known as the "oil tiger", has its fuel cost as its most important cost component, accounting for about 40% of the total cost. The International Air Transport Association (IATA) recently stated that global airlines will achieve a record profit higher than expected this year, boosted by economic growth and fuel price declines, and they may gain an additional 25% next year.

In its 2014 semi-annual report, China Eastern Airlines mentioned that the cost of aviation fuel is the company's largest operating cost. If there are significant fluctuations in international oil prices and drastic changes in domestic jet fuel prices, the company's operating performance may be significantly affected. Both Eastern Airlines and China Southern Airlines mentioned that in the first half of 2014, if other variables remained unchanged, if the average jet fuel price increased or decreased by 5%, the company’s jet fuel costs would increase or decrease by approximately RMB 747 million and RMB 8.59 respectively. 100 million yuan.

According to the data, in 2013, the fuel costs of China Eastern Airlines, China Southern Airlines and Air China were 30.68 billion yuan, 35.54 billion yuan and 33.72 billion yuan respectively, which accounted for 38.2%, 40.8% and 40.8% of the operating costs, respectively. In 2013, the fuel cost of the three major airlines was close to 100 billion yuan.

CITIC Securities estimates that if the price of oil drops by about 20%, the average net profit of each airline will increase from RMB 1.3 billion to RMB 1.5 billion.

Some analysts believe that because most airlines do hedging, the positives of low oil prices will take a while to become apparent.

It is worth noting that the 2013 annual report of China Eastern Airlines and China Southern Airlines shows that the aviation oil hedging business was not carried out in 2013. In an interview with reporters, Air China’s director-general Rao Yuyu said, “Air China has not taken hedging.”

“Now domestic airlines basically do not do crude oil hedging.” Wu Yifan, an analyst at Shenyin Wanguo Securities, said in an interview: “The impact on them is quite large, and they have more impact on China Southern’s performance and greater flexibility. ”

Yan Nan, analyst at Haitong Securities, said that oil prices have plummeted in the fourth quarter and are currently below US$80. In the first three quarters of this year, the average value of international oil prices was around $100. If the downward trend in oil prices forms, the fourth quarter will significantly improve the cost of airlines in the fourth quarter.

Airline high-speed rail contends for the source of "willfulness"

“Although the improvement in oil prices is significant, with the sharp rise in stock prices, the marginal effect of favorable oil prices in the later period will be weakened, and the improvement in supply and demand will gradually confirm the improvement in earnings, so there is still ample room for growth in the medium to long term.” Yan Nan's analysis believes that apart from the impact of oil prices on the profitability of aviation, the relationship between supply and demand is also a key factor.

According to the Haitong Securities Research Report, the profitability of Air China, China Southern Airlines, and China Eastern Airlines’ three major aviation companies has reached an all-time high in 2010 (net profit growth rates were 142.8%, 1521.5%, and 896.3%, respectively). The imbalance between supply and demand.

As China's high-speed rail construction enters the “fast lane”, the impact of the opening of many high-speed rail lines on the aviation industry has also caused concern.

Whether it is more cost-effective to choose whether to take the high-speed rail or fly is an issue that more and more people are concerned about.

The reporter logged on to “Where is the Net” to find that taking Beijing-Guangzhou ticket on January 1st, 2015 as an example, the cheapest ticket price was 543 yuan, plus airport construction and fuel surcharges totaled 693 yuan. On the same day, the high-speed rail first-class seat fare was 1,380 yuan, and the second-class seat fare was 862 yuan. The fastest high-speed rail arrives in 8 hours and 3 minutes. The plane only takes 3 hours and 5 minutes. Not only is the ticket price cheaper, but also the travel time is much shorter.

It is understood that the high-speed railway is divided into two private rooms and four private rooms, and two-person private room is four to four times the moving fare is 1.5 times to 1.8 times. Therefore, the highest fare for moving beds has exceeded 3,000 yuan.

In fact, the fuel surcharge on domestic routes was reduced for the fifth time this year on December 5. The fuel surcharge on domestic routes was further lowered by 10 yuan, and the fuel surcharges of more than 800 kilometers and 800 kilometers (inclusive) would be reduced to 60 yuan respectively. And 30 yuan. Compared with the highest of 150 yuan and 80 yuan, the current charge is less than half the time.

So will the high-speed rail impact the airline? Wu Yifan said: "The marginal impact of high-speed rail on airlines is already very small, and the substitution of high-speed rails below 800 kilometers is relatively strong."

Industry insiders believe that as the price of jet fuel falls, the reduction in fuel surcharges has caused the price of tickets to shrink, resulting in discounted tickets purchased by passengers on some routes less than high-speed rail fares during the same period. Affected by multiple favorable factors, airlines will step up efforts to promote discounted promotions, which will help attract high-end customers who are “taken away” by high-speed trains during the upcoming Spring Festival holidays. It is expected that aviation demand growth will reach 10.5% in 2015. The further growth in the volume and revenue of international airlines will add to the company’s full-year results.