Korean Air shares fell more than 10% on the 16th even as the carrier posted third-quarter revenue above 5 trillion won, with investors focused on the uncertainty created by high oil prices. The airline plans to raise fuel surcharges by as much as 13% next month.
Korean Air (003490.KS) traded at 26,375 won as of 3:14 p.m. on the 16th, down 10.44% from the previous session, according to the Korea Exchange. The drop came as the benchmark KOSPI index rose 1.82%. Asiana Airlines (020560.KS) fell 9.30% to 7,120 won. Jeju Air (089590.KS) lost 3.81% and Jin Air (272450.KS) fell 3.10%.
Analysts pointed to high oil prices as the main reason for the selloff. With crude supply disruptions persisting amid a prolonged conflict in the Middle East, airlines are raising fuel surcharges to offset rising costs. Korean Air will lift international fuel surcharges by up to 13% next month, pushing the round-trip surcharge on its longest routes to 816,200 won from 725,200 won this month, an increase of 91,000 won. Higher ticket prices are expected to weigh on earnings by curbing passenger demand.
Korean Air posted strong third-quarter results. Revenue on a separate basis rose 26% from a year earlier to 5.04 trillion won ($3.5 billion), while operating profit climbed 12% to 421.2 billion won ($296 million). Cargo revenue jumped 34% and passenger revenue rose 21%, driving the gains. Still, most brokerages left their target prices unchanged after the earnings release, citing sustained high fuel costs.
"How the company absorbs the burden of high oil prices will determine its future earnings," an industry official said. "Improving profitability after the merger with Asiana Airlines also looks important."
