Eugene Securities forecasted that Jeju Air would continue to incur operating losses in the second quarter due to the off-season following poor performance in the first quarter of this year. It is analyzed that operations can return to normal after the third quarter, and performance is expected to improve somewhat with the resumption of routes to China. The target price was lowered from 12,000 won to 8,000 won, while the investment opinion remains "buy."
Jeju Air recorded 384.7 billion won in revenue and 32.6 billion won in operating losses for the first quarter. Revenue decreased by 31% compared to the same period last year, and operating profit turned positive. Factors for the poor performance include a reduction in operations due to accidents at the beginning of the year and a decline in fares. In fact, the number of flights operated by Jeju Air in the first quarter dropped by 13% and 18% year-on-year for international flights, totaling 12,022 flights, and for domestic flights, totaling 11,066 flights.
Yang Seung-yun, a researcher at Eugene Securities, noted, "In the second quarter, recovery of business volume during the off-season will be slow, and operating losses are expected to continue," and analyzed, "If business volume normalizes during the peak season in the third quarter, a return to operating profit is anticipated."
He added, "In April, the number of domestic flights has normalized to a level similar to last year," and "The boarding rates for international flights are also normalizing."
There are analyses suggesting that Jeju Air's performance rebound depends on the recovery of demand for routes to China. Jeju Air is reportedly increasing the frequency of its Incheon-Weihai flights, resuming operations for its Jeju-Xi'an route, and considering the operation of its Busan-Shanghai route.
Researcher Yang explained, "The boarding rate for routes to China from Incheon has risen from about 80% in the first quarter to the late 80% range in the second quarter," and added, "If the fare for routes to China does not drop alongside strong demand, it is expected to emerge as a new revenue route, following the routes to Japan."