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Photo = Yonhap news |
[Alpha Biz= Paul Lee] NH Investment & Securities has revised down its earnings forecast for Jeju Air, citing reduced capacity and passenger load factors following a recent aircraft incident. The brokerage lowered its target price from KRW 9,200 to KRW 8,000 while maintaining a ‘Hold’ rating.
In its Thursday report, NH Investment & Securities cut Jeju Air’s estimated operating profit for 2024 by 47% to KRW 48.3 billion.
The firm stated, "Following the aircraft incident, seat capacity has been reduced, and the impact of lower passenger load factors during the peak travel season in January has been reflected. Additionally, considering market competition, we expect international fares to decline by 3%."
While Jeju Air’s passenger load factor, which dropped to 75% in January, is expected to gradually recover, NH Investment noted that the overall growth rate of international passenger traffic in South Korea is projected to slow to 6% this year. The airline is also facing intensifying competition from low-cost carriers (LCCs) on short-haul routes, leading to downward pressure on fares and weaker profit momentum.
NH Investment highlighted concerns over reduced seat capacity and potential fare competition outside peak holiday periods.
In Q4 2023, Jeju Air reported revenue of KRW 450.4 billion, down 6.5% year-over-year, with an operating loss of KRW 40.3 billion. The airline's international passenger traffic grew by only 0.8% year-over-year to 4.58 billion RPK (Revenue Passenger Kilometers), while international fares fell 10.1% to KRW 69 per RPK.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
