"Asiana Airlines in a 'Sammyeonchoga' Situation, What Is the Direction of Its Stock Price?"

[Image source=Yonhap News]

[Asia Economy Reporter Koh Hyung-kwang] Attention is focused on the future stock price trend of Asiana Airlines, which has entered the process of a failed sale. While the prevailing view is that investment sentiment will worsen further due to the failed sale and the resurgence of COVID-19, there are also forecasts that a rebound could be sought around the time of vaccine development in the second half of the year.

According to the Korea Exchange on the 4th, Asiana Airlines was traded at 4,200 won on the KOSPI market as of 10:50 a.m., down 4.5% from the previous trading day. This marks a decline for two consecutive days following the drop the day before. Compared to the year-end stock price (5,400 won), it has fallen by 28.5%. While the domestic stock market is showing an upward trend, Asiana Airlines’ stock price has not followed this pattern.

The prevailing outlook is that Asiana Airlines’ stock price will find it difficult to rebound in the near term. This is because uncertainty continues due to the failed sale, and there are no signs of improvement in the situation of airline stocks struggling due to COVID-19. The sharp decline in demand has continued into the third quarter, making it difficult to predict a recovery timeline.

In the second quarter, international passengers dropped sharply by 98% year-on-year to about 542,000, leading to poor performance for domestic airlines. In July, international passengers fell by 97.3% compared to the previous year, and last month, weekly passenger numbers remained around 50,000, showing little sign of narrowing the decline. Choi Go-woon, a researcher at Korea Investment & Securities, explained, "Thanks to the slowdown in the spread of COVID-19 in Korea, domestic demand is recovering, but it is insufficient to fill the gap in international flights. The problem is that passenger planes, having lost their destinations, are concentrated on domestic routes, causing fares to drop by more than 40%."

Freight rates, which led to surprising profits for major airlines in the second quarter, are gradually decreasing and are expected to contribute little to performance in the second half of the year. Kim Young-ho, a researcher at Samsung Securities, said, "In June, the global average freight rate rose 76% year-on-year to $3.12, but compared to the previous month, it fell 21%, marking the first decline in four months since March, indicating a slowdown in the surge. Also, the volume of personal hygiene-related goods trade, which greatly contributed to the performance of major domestic airlines in the second quarter, showed a negative growth trend in July, so the increase in freight rates in the second half is expected to slow down."

Although stock prices may experience increased volatility depending on the progress of COVID-19 treatments or vaccine development, the general view is that it will take considerable time for fundamental improvements. Yang Ji-hwan, a researcher at Daishin Securities, said, "The resurgence of COVID-19 in Korea is occurring, and the outlook is realistically pessimistic. It is premature to talk about buying at low prices."

There is also some expectation that investment sentiment may improve. Kim Yoo-hyuk, a researcher at Hanwha Investment & Securities, predicted, "Although it will be difficult for passenger demand to recover in the short term due to the ongoing spread of COVID-19, a favorable freight market will continue to support the stock price floor, and as visibility of passenger demand recovery increases, the stock price will trend upward."

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