Korean Air’s stock price displays bullish performance

By Anna J. Park

Korean Air’s stock price has been on a bullish run recently, buoyed by expectations of rapid progress in COVID-19 vaccinations and increasing global freight charges.

The country’s flagship carrier saw its stock price close Tuesday at 32,700 won ($29.30), up 1.24 percent from the previous session. The price increase was powered by net purchases by foreign and retail investors.

Retail investors, in particular, net-purchased the stock during eight sessions from May 27 until Tuesday. In fact, retail investors net purchased the stock for the entire two-week period, except for only one session on June 2.

The company’s stock price jumped by 17 percent during the past month alone. It is noteworthy that the price reflects market expectations of a recovery in tourism demand, even though a full-fledged rebound has yet to begin.

Rising global air freight charges has also increased the luster of the flag carrier, even though international travel demand remains lackluster.

Korean Air is the only carrier in Korea that logged an operating profit during the first quarter, thanks to its cargo shipment performance. As cargo charges increased by some 40 percent during the past year, Korean Air managed to achieve an operating profit of 101.5 billion won during the three-month period. Over three quarters of its revenue during January to March came from freight shipments.

Market experts forecast the carrier to achieve a solid profit in the second quarter amid signs of a recovery in global trade.

“The passenger transportation sector’s performance in May declined by about 68 percent from May 2019 before the COVID-19 pandemic. However, the performance of the domestic transportation as well as freight businesses have displayed an improvement compared to pre-COVID-19 days,” said Choi Go-un, analyst at Korea Investment & Securities.

“Monthly cargo shipments have increased by some 40 percent for the past two consecutive months. Thanks to the solid freight performance, operating profit in the second quarter is expected to far exceed market consensus.”

Experts also forecast demand for overseas travel to start rising in the latter half of this year. The expert explained that local airlines will resume offering flights to major vacations spots, such as Guam and Saipan, in August.