South Korean airline stocks fall as WTI futures jump 6.69% to $102.48

  • South Korean airline shares declined broadly as the Middle East conflict lifted oil prices.
  • 6.69%: October WTI crude futures rose overnight to $102.48 a barrel.
  • Outbound travelers totaled 2,419,457 in July this year, down 0.7% year-on-year.

South Korean airline shares fell broadly as the prolonged Middle East conflict drove international oil prices higher. Korean Air traded at 28,700 won, down 2.88%, as of 2:48 p.m. on the 11th, while Jin Air fell 3.41% to 5,940 won, Jeju Air dropped 2.45% to 4,785 won and Asiana Airlines declined 2.03%, according to the Korea Exchange. West Texas Intermediate crude futures for October delivery rose 6.69% overnight to $102.48 a barrel. Fuel represents about 30% of airline operating costs, putting pressure on earnings when crude rises, while softer air-travel demand makes higher fares and fuel surcharges difficult to sustain. Korea Tourism Statistics recorded 2,419,457 outbound travelers in July this year, down 0.7% from 2,435,291 a year earlier and equal to 91.6% of July 2019 levels. The oil outlook is also being shaped by continuing disruptions around the Strait of Hormuz and concerns that Yemen’s Iran-aligned Houthi rebels could take control of the Bab el-Mandeb Strait, a passage linking the Arabian Sea, Red Sea and Suez Canal. A securities industry official said airline stocks are likely to track developments in the Middle East conflict for the time being.

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