While the KOSPI index has regained the 4,000 level and the bull market continues, airline stocks remain stubbornly weak. With airlines' earnings falling short of expectations in the securities market, foreigners and institutions are selling airline shares.
Experts say the airlines' poor earnings stem from structural problems, such as intensified competition due to an oversupply of passenger jets, rather than temporary factors. For the time being, it will be difficult for airlines to improve earnings, and a rebound in share prices is therefore unlikely.
According to the Korea Exchange (KRX) on the 11th, on the 10th Korean Air closed at 22,000 won, up 1.38% from the previous trading day. It rebounded slightly but has not recovered to the 26,250 won level recorded on July 14. Asiana Airlines also ended the session at 8,600 won, up 2.5% from the previous trading day, but that is close to the recent 52-week low of 8,360 won.
Compared with the Jan. 2 closing price this year, Korean Air's closing price on the 10th fell 7%. Over the same period, shares of Asiana Airlines (17%), JIN AIR (26%), and Jeju Air (23%) also plunged by double digits.
While the KOSPI index rose 70% from early this year to the 10th of this month, airline shares fell instead.
Weak earnings led to falling share prices. Korean Air posted third-quarter revenue of 4.0085 trillion won. That is 2.4% below the consensus (market forecast) of 4.115 trillion won. JIN AIR's third-quarter revenue also came in at 304.3 billion won, 11.75% below the market consensus of 344.8 billion won.
Earnings outlooks are also subdued for airlines that have yet to report. According to FnGuide, Jeju Air's full-year 2025 revenue is estimated at 1.5455 trillion won. That is expected to be down 20% from last year's 1.9358 trillion won. Asiana Airlines' revenue this year is also projected at 7.558 trillion won, down 9% from last year. T'way Air is expected to post an operating loss of 168.7 billion won.
The securities market points to an oversupply of passenger aircraft as the root cause of weak results. Jeong Yeonseung, an analyst at NH Investment & Securities, said, "Aircraft supply exceeding demand is a key reason airline share prices are falling."
According to the Korea Air Transport Association, the number of aircraft in Korea increased from 290 in 2014 to 410 in 2024. That is a 41% increase over 10 years. The number of aircraft owned by domestic airlines is expected to expand to 432 by the end of this year.
While aircraft supply has increased, demand has stagnated, intensifying pressure on airfares to fall. Both full-service carriers and low-cost carriers (LCCs) are seeing profitability worsen as price competition intensifies. Jeong noted, "The exchange rate is a temporary factor, but if fare-cutting competition continues in a saturated supply environment, all airlines will inevitably see profitability deteriorate."
On top of that, the burden of a strong dollar is heavy. Because airlines pay most lease fees, jet fuel, and parts in dollars, a rise in the won-dollar exchange rate directly leads to higher expenses. With valuation losses on foreign-currency debt also occurring, profitability continues to deteriorate.
Foreigners and institutions are dumping airline shares. Even between Oct. 27 and Nov. 3, when the KOSPI index extended a historic rally from the low 4,000s to the 4,200 level in one leap, foreigners and institutions recorded a net sell-off of 60.6 billion won in four airline stocks (Korean Air, Asiana Airlines, JIN AIR, Jeju Air). During last week, when the KOSPI was volatile (Nov. 4–7), both foreigners and institutions also turned to "sell." They recorded net sales of 33.8 billion won.
The securities market sees little chance of an imminent rebound in airline shares. Jeong forecast, "Absent a resolution of structural factors, a full-fledged recovery in airline earnings will be difficult."