[THE INVESTOR] Jeju Air has placed record orders for new aircrafts, but its financial burden is limited, said Mirae Asset Daewoo on Nov. 21 maintaining a “buy” recommendation and 50,000 won (US$44.16) target price.
It has announced the purchase of 40 B737 MAX at US$4.4 billion with the option for an additional 10. This could raise concerns over finances, but considering the low-cost carrier’s ability to stably generate cash and financial health, worries over cash flow and capital raise is unwarranted, said analyst Ryu Je-hyeon.
Investors should rather look at the possibility that it will further expand market share as it will be able to cut cost per available seat-kilometer in the long. When it completes introducing the newest aircraft model with much improved fuel efficiency, it will be able to save close to 30 billion won in annual costs, he forecast.
By Hwang You-mee (firstname.lastname@example.org)