Shares of Korean Air Lines and its budget-airline affiliate Jin Air rose Friday on market expectations for strong second-quarter earnings.
Korean Air and Jin Air were up as much as 4.5% to 24,200 won ($19.05) and 8.2% to KRW16,860, respectively, in morning trade, outperforming the stock benchmark Kospi’s 0.2% gain.
Lower fuel costs and a strong recovery in passenger-flight demand are set to drive the South Korean flag carriers to post above-consensus earnings for the June quarter, Daishin Securities analysts Yang Ji-hwan and Lee Ji-ni said in a research note Friday.
The analysts raised their operating-profit forecast for Korean Air by 37% to KRW552 billion for the second quarter, compared with the FnGuide-compiled consensus estimate of KRW351 billion.
Jet-fuel prices, which are averaging $93 a barrel for the second quarter, are way below Daishin’s earlier projection of $105 a barrel, which should save Korean Air more than KRW100 billion in costs, they said.
The recovery in demand for international passenger flights is also stronger than expected, they added.
Daishin maintained its buy rating on Korean Air and raised its target price by 10% to KRW33,000.