The price of oil had its biggest decline since March 2003 last week on concerns that the credit crunch and a slowing global economy will damp demand. That helped cause a 15 percent drop in the price of jet fuel, the single-biggest expense for Korean Air and most other Asian carriers.
“Fuel prices fell to a level that can offset concerns over slowing demand,'' said Um Kyung A, a Seoul-based analyst at Shinyoung Securities Co. “If fuel remains where it is now, global airlines' profit will probably recover from the fourth quarter.”
A rise in the won also helped improve investors' sentiment toward Korean carriers, Um said. Asiana Airlines Inc., the country's second-biggest carrier, climbed as much as 5.7%.
The won, Asia's worst-performing major currency this year, rose 4.9 percent to 1,246.10 against the dollar as of 9:20 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd.
A weak won hurts Korean carriers' earnings by boosting the repatriated cost of dollar-paid fuel expenses and increasing the value of the carrier's foreign-currency denominated debt.
Chinese airlines rose in Shanghai amid a 3.4 percent drop in the benchmark CSI 300 Index. China Southern Airlines Co., the nation's largest, gained as much as 5.3%. Air China Ltd., ranked second, climbed as much as 5.7%. Shanghai Airlines Co. surged as much as 9.9%.
Crude oil for November delivery rose as much as $3.37, or 4.3%, to $81.07 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $80.83 at 9:38 a.m.
Jet-fuel dropped 6.8% to $91.5 per barrel in Singapore trading on Oct. 10.
Author: Jo Amey
