Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Aviation stocks rally ahead of summer vacation season
Passenger jets from Korean Air and Asiana Airlines are parked at Incheon International Airport in this June 7 file photo. Yonhap
By Lee Min-hyung
By Lee Min-hyung
Aviation stocks are picking up steam ahead of the summer vacation season on the expectation of airlines' earnings recovery driven by oil price cuts and growing travel demand.
Shares of Korea Air, the nation's largest air carrier, have been on a steep upward trend since the beginning of June. The firm's stock price fell to this year's low of around 22,000 won ($16.85) per share early last month, but soared by almost 13.6 percent to over 25,000 won as of Monday.
This is a surprise rally, compared with the overall stock doldrums in the benchmark KOSPI. The main bourse went on a losing streak for the past month amid a foreign investor selling spree.
Other low-cost carriers also achieved a robust rally during the same period. Last month, shares of Jin Air fell to a yearly low of 14,500 won per share, but have recovered to more than 16,000 won. Jeju Air shares also succeeded in attaining a similar level of double-digit growth during the same period in hopes of earnings recovery.
Market analysts said most air carriers will be able to extend a more powerful stock rally in the third quarter when demand for travel here and abroad will rise.
“Travel demand reaches its peak in the third quarter, and tourists' demand for Japan will particularly remain strong on the weakening yen,” Lee Byung-geun, an analyst at Heungkuk Securities, said. “The overall aviation stock will rally on expectations for solid earnings forecast in the second and third quarter.”
Unlike aviation stocks, major travel agencies have failed to recover their stock value, as fewer people are buying package tours than before. Shares of HanaTour, the nation's largest travel firm, hit this year's high in early March, but have since rapidly lost steam. Its stock is traded at around 50,000 won, a drop from this year's high of 66,700 won. Modetour shares are also on a sharp downward spiral for the past month. Its stock value has suffered a double-digit decline from mid-June for a similar reason.
This was due to a change in travel patterns after the pandemic. Demand for package travel is yet to recover to a pre-pandemic level. According to data from Hana Securities, the figure almost halved in recent years, as the overall overseas travel pattern has drastically changed, with more people preferring personal travel.