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| Passenger planes at Incheon International Airport on May 16. Yonhap |
By Lee Min-hyung
Aviation stocks are on the path to recovery after suffering from a nightmarish fall in the second quarter, as they are widely forecast to achieve a major earnings rebound due to declining oil prices and reviving demand for travel here and abroad, analysts said.
Shares of Korean Air had been on a steep decline until early July, hit hard by crude oil price hikes, at the time, caused by Russia's invasion of Ukraine. Korean Air shares were traded at 32,000 won in March, but the value plummeted to around 23,000 won in mid-July.
However, the stock price of the nation's largest carrier has since gone on an upward trajectory. Korean Air shares recovered to 26,500 won as of Thursday, extending a winning streak for four consecutive trading days until Wednesday.
Other airlines ― such as Asiana Airlines, Jin Air and Jeju Air ― also displayed a similar trend in their stock prices during the same period.
Jin Air, one of the low-cost carriers (LCC) here, reduced its deficit in the second quarter due to the fall in oil prices and a recovery in travel sentiment after the government eased social distancing rules. The company reported a deficit of 15.1 billion in the second quarter, but it increased its sales by around 99 percent during the same period a year ago.
Most LCCs here also displayed dismal earnings performances in the first half of this year, but market analysts said airlines would be able to achieve a major earnings rebound in 2023 when international flights are forecast to normalize from the pandemic shock.
"Passenger traffic performance of local LCCs has shown a gradual recovery," Chae Yoon-seok, an analyst at IBK Investment & Securities, said. "The recovery was driven by growing demand for international travel."
The number of passengers from the nation's three major LCCs ― Jeju Air, Jin Air and T'way Air ― came in at 1.75 million in July, up 10.2 percent from a month earlier.
The degree of recovery in travel demand full service carriers (FSC) and LCCs witness will also be reflected in their near-term stock movements, according to Hanwha Investment & Securities analyst Park Su-young.
"The focus will be on the recovery in the number of passengers during the annual peak season of August, and this will determine the future course of their stock prices," the analyst said.
