Airline stocks fall across the board amid a double blow from a weak won and higher oil prices
Summary
- Airline stocks, including Korean Air, Jeju Air and Asiana Airlines, were reported to be falling in unison as the sector is hit by the double blow of higher oil prices and a weaker exchange rate.
- The won-dollar exchange rate has surged into the 1,490-won range, marking the highest level since March 2009 and heightening concerns over worsening airline earnings, the report said.
- WTI and Brent futures have jumped 18.83% and 16.78%, respectively, sharply increasing airlines’ fuel-cost burden, it added.
Forecast Trend Report by Period
Airline stocks are plunging across the board, weighed by the twin headwinds of higher oil prices and a weaker exchange rate.
As of 9:47 a.m. on the 9th, T'way Air was trading at 1,067 won, down 122 won (10.26%) from the previous session’s close. Korean Air (-7.76%), Jeju Air (-5.58%), Asiana Airlines (-5.11%), Jin Air (-5.02%) and Air Busan (-4.17%), among others, were all in the red.
The moves appear to be driven by a sharp rise in the won-dollar exchange rate and international oil prices. When the dollar strengthens and oil prices climb, airline earnings tend to deteriorate.
The exchange rate opened at 1,493 won, up 16.60 won from the previous session, and has been hovering in the 1,490-won range. It is the highest level since March 12, 2009 (intraday high of 1,500 won), during the global financial crisis.
The surge is attributed to jumping oil prices. Around 9:30 a.m., WTI crude futures on the New York Mercantile Exchange were up 18.83% at $108.01 per barrel. Brent crude futures were also up 16.78%, at $108.24 per barrel.
Byoung-gi Jin, Hankyung.com reporter young71@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
