HONG KONG: Asian airline shares remained under pressure yesterday as the United States and Israeli’s war against Iran escalated, with carriers closely monitoring fuel price spikes and many seeing a surge in bookings as passengers switch from Middle Eastern airlines.
Qantas Airways chief executive (CEO) Vanessa Hudson said the airline had “pretty good” fuel hedging in place but the spike in oil prices amid the conflict between the US, Israel and Iran was significant for the aviation industry.
“We have got pretty good hedging in place, but these are pretty significant impacts on aviation and we’re just continuing to watch how it all unfolds,” she said at the Australian Financial Review’s business summit as the airline’s shares fell for a second day, trading as much as 3.9% lower.
Oil prices have surged amid the widening Middle East conflict, potentially driving up the cost of jet fuel and hurting profits.
Major Gulf hubs, including the world’s busiest international airport Dubai, which usually handles over 1,000 flights a day, remained closed for a fourth day.
That has left tens of thousands of passengers stranded as aviation faced its biggest test since the Covid-19 lockdowns. Qantas said last week that it had 81% of its fuel hedged for the second half of its financial year ending June 30.
Japan Airlines chief financial officer Yuji Saito said on Monday the carrier planned to adjust its fuel surcharge for international flights, but did not provide a timeframe.
In the domestic market “since there is no surcharge, we’re offsetting part of the price spike through hedging”, he told reporters.
Japan Airlines shares were down 3.5% in early trading yesterday. Shares of Korean AirLines fell nearly 8% after resuming trade following a public holiday on Monday and shares in Hong Kong’s Cathay Pacific Airways were down more than 2%.
Shares of major Chinese carriers Air China, China Eastern Airlines, and China Southern Airlines all dropped between 3% and 5%.
The CEO of Australia’s biggest investment bank Macquarie Group, Shemara Wikramanayake, said yesterday the conflict appeared likely to affect the availability of oil, as well as the cost.
“There is going to be a deliverability issue there,” said Wikramanayake, whose company is one of the world’s largest traders of oil and gas.
Alternatives to Gulf airlines showed a surge in passenger bookings and ticket prices, according to Reuters’ checks of the carriers’ websites.
A search on Cathay Pacific’s website yesterday showed no available economy-class seats on the Hong Kong-London route until March 11, with a one-way ticket on that day costing at least HK$21,158 (US$2,705.28), falling to a more normal HK$5,054 later in the month.
For flights from Sydney to London, Qantas is not offering any economy-class tickets on flights via its normal Perth and Singapore routings until March 17, when one is available for A$3,129 (US$2,220.03) one-way. — Reuters
