[Click eStock] "Jeju Air, New Coronavirus Shock... Enduring Is the Only Way"

[Asia Economy Reporter Park Jihwan] NH Investment & Securities evaluated Jeju Air on the 12th, stating that the airline recorded a large-scale operating loss in the fourth quarter of last year, and due to the impact of the novel coronavirus (COVID-19), an operating loss caused by a sharp decline in demand in the first quarter is inevitable. Accordingly, the investment opinion was maintained as 'Buy,' but the target stock price was lowered by 15.38% from the previous 26,000 KRW to 22,000 KRW.

Jeong Yeonseung, a researcher at NH Investment & Securities, explained, "The spread of COVID-19 has led to a decline in demand not only on China routes but also on international and domestic routes," adding, "Jeju Air has the largest number of aircraft among domestic low-cost carriers and a high sales proportion from China routes, resulting in the greatest fixed cost burden."

Researcher Jeong diagnosed, "Fourth-quarter sales decreased by 2.5% year-on-year to 309.4 billion KRW, and the operating loss recorded was 45.1 billion KRW," adding, "An operating loss is also inevitable in the first quarter of this year." "Jeju Air's fourth-quarter international passenger ASK (Available Seat Kilometers) and RPK (Revenue Passenger Kilometers) increased by 18.4% and18.2% year-on-year, respectively, while the dollar-based fare actually fell by 23.0%," he added.

Researcher Jeong said, "Due to the decline in demand during the peak season, the annual operating loss is expected to expand further," and added, "At this point, the only strategy is to endure through aggressive cost-cutting."

This content was produced with the assistance of AI translation services.