‘Korean Air burdened by rising fuel costs’

‘Korean Air burdened by rising fuel costs’

Korean Air’s earnings will be weighed down by rising fuel costs, said Cape Investment and Securities on Oct. 2 lowering the target price to 40,000 won (US$35.89) from 44,000 won while maintaining a “buy” recommendation.

Its operating profit in the third quarter will decline 6.6 percent on-year to 332 billion won. Although the passenger traffic remains at the same level as last year, costs have hiked at double-digit rates. Fuel costs in the period spiked 32.7 percent on-year to 875.1 billion won and will continue to drag down the bottom line in the next quarter, said analyst Shin Min-seok.

The number of outbound domestic tourists increased only 4.4 percent and 5.6 percent respectively in July and August, and demand is slowing down after having grown at double-digit rates since 2014, added the analyst.

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