NH Investment & Securities noted on the 31st that as conflicts surrounding management rights intensify regarding T’way Air, short-term stock price volatility is expected to increase. The firm raised its target price from 3,000 won to 3,500 won and presented a 'neutral' investment opinion. The stock price of T’way Air was 4,110 won on the last trading day.

The T’way Air check-in counter at Incheon International Airport. /Courtesy of Yonhap News Agency

T’way Air's revenue for the fourth quarter of last year is expected to reach 386.4 billion won, a 7.6% increase from the previous year, while an operating loss of 11.6 billion won is anticipated. NH Investment & Securities estimated that international flight fares would decrease by 10.9% compared to the previous year.

Jeong Yeon-seung from NH Investment & Securities said, “In the fourth quarter of last year, it is inevitable that fares would weaken due to the off-peak season for European routes, and the burden of operating expenses is expected to increase due to high exchange rates.”

Expansion of operational aircraft to widen long-distance routes is also underway. Due to the proactively expanded workforce, fixed cost burdens continue, but this year, new routes are expected to be gradually increased, likely lowering fixed cost burdens. Jeong noted, “Long-term expansion through route growth is more critical in the domestic aviation market, where potential is relatively low.”

Short-term stock prices are expected to correlate more with management conflict issues than with financial performance. The equity gap between YeaRimDang and Tway Holdings is merely 3%. Dae Myung Sono Group is reportedly demanding management improvements from T’way Air and will proceed with shareholder proposals, including the appointment of new directors.

Jeong said, “A voting contest is inevitable at the upcoming shareholders' meeting, and short-term stock price volatility will increase,” adding, “Short-term financial performance is expected to fall short due to the profitability burden of long-distance routes, but short-term stock prices will be more significantly impacted by the competition for securing management rights.”