Airline Stocks Surge as Oil Prices Ease; Korean Air Up 6%

Airline stocks rallied sharply in early trading on the 10th as concerns over surging international oil prices eased. Growing expectations for oil price stability are improving investor sentiment, reflecting prospects for reduced cost burdens.

According to the Korea Exchange, as of 9:40 a.m., Korean Air was trading at 23,750 won, up 1,350 won (6.03%) from the previous session. At the same time, Jeju Air rose 235 won (4.77%) to 5,160 won, while Jin Air gained 235 won (3.94%) to 6,205 won, both posting concurrent gains.

Airlines are considered among the sectors most sensitive to oil price fluctuations, as fuel costs account for approximately 30% of carriers' operating expenses. Analysts attribute the stock gains to expectations that cost pressures will ease as concerns over surging international oil prices subside.

President Trump said on the 9th (local time) that the war involving the U.S., Israel, and Iran would be "finished pretty quickly." The Group of Seven's consideration of releasing strategic petroleum reserves also added downward pressure on oil prices. West Texas Intermediate crude, which had exceeded $110 intraday amid concerns over a prolonged Middle East conflict, quickly retreated to the $80 level.

Securities analysts forecast that if oil prices stabilize, expectations for airline sector earnings could regain attention. Koh Go-un, a researcher at Korea Investment & Securities, said, "Airlines are a sector where earnings surprises can be expected if oil prices are controlled," adding, "Since fuel costs account for about 30% of airline operating expenses, oil price stability directly translates to improved profitability."

Air travel demand showed strong recovery in early this year during the winter peak season. International passenger traffic in January and February rose approximately 11% year-over-year, recording the highest level for any winter peak season on record. Demand on Japanese routes increased significantly, driving overall international passenger growth, with Japan route passengers expanding to 28% of total traffic.

Chinese routes also showed recovery with passenger numbers rising approximately 24%, though fares remained stable without significant increases as capacity expansion outpaced demand growth, according to analysts.

Koh noted, "Current first-quarter operating profits for airlines are expected to decline slightly year-over-year, but considering expectations for China lifting its restrictions on Korean entertainment and airlines' expansion into long-haul markets, medium- to long-term growth potential remains intact," adding, "If oil price risks ease, first-quarter earnings expectations could also regain attention."