T'way Air Riding Updraft... Stock Price Soars

Korean Air-Asiana Airlines Merger Benefits
"Transfer of Slots on 4 European Routes... Biggest Beneficiary"

T'way Air's stock price is on the rise. The expectation that it will benefit from the merger of Korean Air and Asiana Airlines in Europe appears to have influenced this trend.

On the 16th, T'way Air closed at 2,990 KRW, up 100 KRW from the previous trading day. This represents a 25.10% increase compared to the end of last year. Compared to other airline stocks during the same period?Korean Air (-5.23%), Asiana Airlines (5.02%), Jeju Air (9.21%), and Jin Air (7.47%)?the rise is quite significant.

This increase is interpreted as being due to expectations surrounding the merger of Korean Air and Asiana Airlines. Recently, foreign media reported that the European Commission (EC) is expected to approve the corporate merger of the two companies. This means that the corrective measures submitted by Korean Air have been accepted. In May of last year, the EC raised concerns about monopolistic practices on European and Korean routes resulting from the merger and requested corrective actions. In response, Korean Air decided to separate and sell Asiana Airlines' cargo business. Additionally, it submitted a corrective plan that includes transferring operating rights for four overlapping European routes (Paris, Frankfurt, Rome, Barcelona) to domestic low-cost carriers (LCCs).

Securities firms expect T'way Air to be the airline receiving these operating rights. Bae Se-ho, a researcher at Hi Investment & Securities, explained, "T'way Air will be the biggest beneficiary of the Korean Air and Asiana Airlines merger," adding, "With the EC's conditional approval likely, it is understood that the transfer of slots for the four routes to T'way Air is a premise."

The reason T'way Air can expand its reach to Europe is that it owns three Airbus A330-300 aircraft, which are medium- to long-haul planes. The company plans to add two more this year and aims to increase its long-haul fleet, including the A330-300, to 20 aircraft by 2027. Lee Jae-hyuk, a researcher at eBest Investment & Securities, said, "Starting with the launch of the Incheon-Zagreb route in the second quarter of this year, the gradual expansion of direct European routes will amplify expectations for improved performance," adding, "With continuous additions of A330-300 and Boeing 737-8 MAX aircraft, the company will continue to grow in scale."

Strong performance is also expected for the fourth quarter of last year. According to FnGuide, securities firms forecast T'way Air's consolidated revenue and operating profit for Q4 last year to be 324.5 billion KRW and 17 billion KRW, respectively. Compared to the same period last year, revenue is expected to increase by 51.64%, and operating profit is expected to turn positive. Bae Se-ho of Hi Investment & Securities explained, "Due to robust overseas travel demand, international passenger transport appears to have increased by 154% compared to the same period last year and by 1.0% compared to the previous quarter."