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SEOUL—Korean Air Lines Co. and China Airlines, South
Korea’s and Taiwan’s largest carriers, led Asian
airlines lower after a record jump in oil prices and
further cuts in flights stoked concerns about profits.
Korean
Air dropped 5 percent to 51,300 won as of the noon
session in Seoul trading Monday, the biggest decline in
almost two months. China Airlines fell 5.4 percent to
NT$14.90 in Taipei, the most in seven weeks, after
saying it will cut about a tenth of capacity.
At least
seven major Asia-Pacific airlines have announced plans
to cut services in the past two weeks, as economic
concerns damp travel demand and higher surcharges fail
to offset jet-fuel costs that have doubled in a year.
The global industry may make a loss of as much as $6.1
billion this year, the worst since 2003, the
International Air Transport Association said last week,
revering an earlier forecast for a profit.
“Carriers are coming up with various measures to counter
fuel cost, but that won’t be enough to cover rising oil
prices,” said Yun Hee Do, a Korea Investment &
Securities Co. analyst in
Seoul.
He rates Korean Air as “buy.”
China
Airlines plans to cut 100 passenger flights a month,
mainly to the US and Asia from June, it said Monday.
Smaller rival Eva Airways Corp. also said it will reduce
services from September because of surging jet-fuel
costs.
The
carriers follow airlines including Qantas Airways Ltd.
and Air New Zealand Ltd., which both said last week that
they would trim international services because of rising
prices for jet fuel, most Asian carriers’ biggest
expense.
The cost
of jet fuel has surged in line with the price of crude
oil, which jumped 8.4 percent to $138.54 a barrel in New
York on June 6. That was the largest-ever one-day rise
in dollar terms and the biggest as a percentage since
June 1996.
EVA Air
fell 4.4 percent to NT$16.35 in
Taipei
trading. Air New Zealand, the nation’s largest carrier,
dropped 5.1 percent to NZ$1.11. Australia’s market was
shut for a holiday.
Korean
Air last week said it would begin levying fuel
surcharges on domestic routes from July. Smaller rival
Asiana Airlines Inc. is asking employees to take
voluntary unpaid leave. Both carriers are scaling back
their international services.
Asiana
lost 4.4 percent to 5,700 won in
Seoul.
Japan Airlines Corp. fell 2.1 percent to ¥238 in
Tokyo. All Nippon Airways Co. slipped 0.8 percent to ¥397.
Singapore Airlines Ltd.,
Asia’s most profitable carrier, lost 2 percent to S$15.44 in the
city.
Concerns
about rising fuel prices have helped cause the Bloomberg
Asia Pacific Airlines Index, comprising 17 stocks, to
plunge 35 percent this year. The benchmark MSCI
Asia-Pacific Index, which tracks 991 regional stocks
across different industries, has slipped 4.7 percent
this year.
Every
stock in the Bloomberg airline index is down this year.
Only four—All Nippon, Japan Airlines, Singapore Airlines
and Thai Airways International Pcl—have lost less than
20 percent. Virgin Blue Holdings Ltd.,
Australia’s
second-biggest carrier, is the biggest faller, plunging
70 percent.
Jet-fuel
prices climbed 3.8 percent to $162.15 a barrel in
Singapore trading on June 6. (Bloomberg) |
