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Korean Air stocks at 52-week low on poor earnings, uncertainties

All Headlines 10:33 August 16, 2019

By Choi Kyong-ae

SEOUL, Aug. 16 (Yonhap) -- Korean Air Lines Co. fell sharply in Friday morning trading to a 52-week low after it reported poorer-than-expected second-quarter earnings amid worsening business environments.

Immediately after the market opening, Korean Air plunged 5.2 percent to touch a new 52-week low of 21,700 won (US$18) per share. As of 10:18 a.m., the country's biggest full-service carrier traded 2 percent lower at 22,450 won, underperforming the broader KOSPI's 1 percent decline.

On Wednesday, the country's national flag carrier said its second-quarter loss widened from a year earlier. Net losses deepened to 396.3 billion won in the second quarter from 304.7 billion won a year earlier.

This undated photo shows a Korean Air B787-9 passenger jet. (Yonhap)

The won's weakness against the U.S. dollar drove up fuel purchasing costs and the value of dollar-denominated debts. The ongoing U.S.-China trade war drove down demand in the cargo delivery business, also eating into the quarterly bottom line, the airline said.

A nationwide anti-Japan campaign here amid a trade row with the neighbor and China's unexpected announcement that it won't accept applications for new and additional flights from foreign airlines for two months through Oct. 10 will further weigh on Korean Air stocks, analysts said.

In early July, Japan restricted exports of three high-tech materials used in chips and display panels in apparent retaliation against a series of South Korean court rulings last year over Japan's wartime forced labor.

Early this month, it officially excluded Korea from its "whitelist" of trusted trading partners that enjoy fast-track export clearance.

"Korean Air is likely to continue to report disappointing earnings results for the rest of the year due to a nationwide boycott on Japanese goods and travel to the country, coupled with a slowing economy and a weak won," Lee Jeong-eun, an analyst at Korea Investment & Securities Co., said.

The brokerage lowered its 12-month target price to 33,000 won from 39,000 won to reflect uncertainties ahead.


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