Korean Air, Asiana, budget airlines suffer from stronger dollar, soaring oil prices

Shares of Korean Air, Asiana Airlines and other low-cost carriers (LCCs) have been hit by a strengthening dollar and soaring crude oil prices amid heightened tension in the Middle East, according to data and company officials, Tuesday. Airline stocks are swayed by the ups and downs of the two key indexes. Airlines incur more operational costs at this period, as they shoulder a heavier financial burden from leasing aircraft and purchasing jet fuel. According to data from the Korea Exchange, shares of Korean Air, the nation’s flag carrier, extended a losing streak on Tuesday, closing down 1.58% at 19,980 won ($14.28) per share. The airline’s stock price has continued a downward curve from the beginning of April, when the won-dollar exchange rate started soaring at an alarming pace due to such external geopolitical risk factors. The rate surged to a 17-month high of 1,400 won per dollar at one time on the same day. “We need to pay close attention to the volatility of not just the oil prices, but the won-dollar exchange rate,” a Korean Air spokesperson said. “When the exchange rate goes up or down by 10 won, this causes gains or losses on the appreciation of the foreign exchange for Korean Air.” The situation is no different to other airlines whose stock prices display a curve similar to Korean Air. Asiana Airlines shares also inched down 0.29% and closed at 10,440 won per share. “We stepped up monitoring of the volatile dollar and oil prices,” a spokesperson for the company said, declining to comment further. Other LCCs also suffered stock falls for similar reasons. Shares of Jeju Air, the largest LCC here by market capitalization, suffered a bigger fall of 2.31% during the same period.<br/>