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Photo courtesy of Yonhap News |
[Alpha Biz= Ellie Kim] Shinhan Securities lowered its target price for Jin Air to KRW 8,000 from KRW 8,500 on May 27, while maintaining a “Buy” rating, citing expectations of continued operating losses through the third quarter.
Analyst Choi Min-gi said the revision reflects adjusted earnings estimates, noting that surging jet fuel prices following Middle East tensions are likely to weigh on profitability. Low-cost carriers (LCCs) face structural challenges in passing on higher fuel costs beyond fuel surcharges, leading to increased cost burdens amid elevated oil prices and currency volatility.
Despite near-term headwinds, Jin Air is expected to maintain a relative advantage over smaller LCCs, supported by its financial stability and backing from its parent company. The recent stabilization in jet fuel prices and the Korean won-dollar exchange rate is also seen as a positive development.
Jin Air reported first-quarter revenue of KRW 423 billion, up 1% year-on-year, and operating profit of KRW 57.6 billion, down 1%, marking a return to profitability after four quarters. Improved yields on short-haul international routes, particularly to Japan and Taiwan, and a rebound in domestic fares supported performance.
While higher fuel surcharges may raise concerns over passenger demand, short-haul routes remain resilient. Jin Air is focusing on demand-driven routes, including smaller Japanese cities, and expects improved fuel efficiency over the mid-to-long term through the introduction of next-generation aircraft such as the Boeing 737-8.
Alphabiz Ellie Kim 인턴기자(press@alphabiz.co.kr)
