Korea Investment & Securities analyzed on 4th that T'way Air has increased international supply by launching European routes, which led to a drop in fares and a large scale of one-time expenses being reflected. The continued deficit is due to the longer than expected time to achieve economies of scale. Accordingly, it has adjusted the target stock price down by 13% from the previous 4,000 won to 3,500 won, while maintaining the investment opinion as "buy."
Hwang Hyun-jung, a research institute member at Korea Investment & Securities, noted, "Last year, seven additional aircraft were added, but due to the impact of the war, we could not fly over Russian airspace, which made it impossible to deploy the A330-300 on European routes, leading to complications in long-haul operations contrary to plans," and explained, "In addition, the fourth quarter of last year is estimated to have increased the loss margin due to the large reflection of exchange losses related to maintenance liabilities in operating expenses."
However, Research Institute member Hwang believes it is necessary to pay attention to the potential of T'way Air, which has undergone a management rights dispute. He stated, "Although the deficit on European routes has not ended yet, this year's valuation may appear expensive, it is important to focus on the bigger picture that Daemyung Sonoh is targeting through the acquisition of T'way Air," and predicted, "In light of the fact that it has first seized the opportunity of a vacant FSC position due to the merger of the two major national airlines, the current deficit is considered a growing pain."
He went on, "The turning point for performance is expected to be the third quarter of this year, the peak season for European travel, where additional long-haul aircraft will be deployed, while fares are also expected to stabilize due to the integration of the two major national airlines," and said, "This is the time to anticipate new momentum, such as the benefits of European routes upon the end of the conflict in Russia and potential synergy with Air Premia."