[Click eStock] "Jin Air, Airline with the Best Cash Reserves... Requires Mid- to Long-Term Perspective"

[Asia Economy Reporter Eunmo Koo] Eugene Investment & Securities evaluated Jin Air as the airline with the strongest cash position and stated that it is necessary to approach it from a mid- to long-term perspective.

The passenger demand shock caused by the novel coronavirus disease (COVID-19) continues into the second half of the year. On the 17th, Minjin Bang, a researcher at Eugene Investment & Securities, reported, “Jin Air is expanding its market share mainly in domestic routes in the third quarter, but it is struggling to secure profitability as the international routes have been hit by more than 90% compared to the same period last year.”

However, as of the end of the first half of the year, Jin Air holds 126.4 billion KRW in cash and cash equivalents, making it the airline with the strongest cash position relative to monthly fixed costs. Researcher Bang said, “Jin Air is currently conducting a paid-in capital increase worth 105 billion KRW (based on the first issuance price of 7,000 KRW). This is in preparation for the possibility of a prolonged COVID-19 crisis, and if successful, it will secure sufficient cash liquidity until the first half of next year.” He added, “Among domestic low-cost carriers, Jin Air is the only one that owns a large aircraft (B777-ER), which it plans to convert into a cargo plane and deploy from the fourth quarter, providing an alternative to partially reduce losses.”

It is an evaluation that a mid- to long-term approach is necessary. Researcher Bang analyzed, “If the COVID-19 situation prolongs, some airlines facing severe liquidity shortages may further reduce their fleet size. As of the end of the first half, the number of aircraft registered for air transport business has already decreased by nine. If market supply shrinks, the leading companies could benefit significantly when passenger demand recovers in the future.”

He also stated, “Due to the unprecedented adverse effects of COVID-19, airlines including Jin Air are not free from deficits and capital erosion risks, making normal valuation difficult. However, with signs of market restructuring, it is necessary to focus on leading companies that have an advantage in survival.”

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