Asiana suffers from dent on image

Fire crews respond to the scene where an Asiana Airlines Boeing 777 crashed at San Francisco International Airport on July 6. Two casualties have been reported, with more than one hundred injured. The plane had 307 people onboard. / AP-Yonhap

By Yi Whan-woo

• Published Jul 7, 2013 6:29 PM KST
• Updated Jul 7, 2013 6:29 PM KST

By Yi Whan-woo

The crash of an Asiana Airlines’ jetliner is expected to hurt the firm’s reputation and to weigh on its business performance and stock price at least in the short term, analysts said Sunday.

They added that the stock price of the country’s No. 2 flagship carrier will undergo a roller coaster ride for a while.

The Boeing 777 passenger plane with 307 people on board crash-landed at San Francisco International Airport on Saturday, killing two people and injuring over a hundred, after a flight from Seoul. Experts say investors will refrain from buying shares of the company for the time being as its brand image has been hit.

“The crash will have a negative effect on the sales of the airliner and its stock price for some months,” an economist at Hanwha Securities said on condition of anonymity. “We’ll need to see how the company will perform damage control in a swift manner, but it’s still likely the firm will suffer in the short term.”

He pointed out that the stock price of Asiana Airlines tumbled to the 6,000-won range a couple of months after its Boeing 747 cargo plane crashed near Jeju Island in July 2011. “The airline was expecting to see its stock price rise to 12,000 won at that time, but investors dumped shares, concerned over the tainted brand image of the company.”

Another economist said the company should explain the cause of the crash as clearly as possible.

“One reason that the airline suffered a blow two years ago was because it failed to provide clear evidence that the accident was not due to a mechanical problem,” he said, asking for anonymity. “Asiana Airline should convince its investors that its remaining planes are in good condition.”

The Hanwha economist, however, said the company will not face a problem in terms of its cash flow.

“I’m certain the jetliner is insured and is capable of paying compensation for the two dead passengers as well as the injured,” he said. “The insurer is going to take care of the matter and it’s unlikely the amount of compensation will be in the trillions of won.”