Caution Is Watchword for Asian Airline Stocks As Sector's Torrid Growth Seems to Be Abating
HONG KONG -- Asian airline stocks took a beating when oil prices rose in August and investors bet that soaring fuel bills would soak up industry profits. Many airlines lost more than a quarter of their value in seven weeks.</br></br>Those bearish investors weren't far off the mark: South Korea's two airlines said last week that the huge increase in fuel costs had pulled them into the red for 2000.</br></br>Now, even though fuel prices have fallen 19% in the past two months, caution is still the watchword for airline stocks among analysts and investors. Shares in blue-chip companies Singapore Airlines and Cathay Pacific Airways have fallen over the same period, at times as fast as fuel prices.</br></br>In yesterday's trading, Asian markets were mixed as interest-rate sensitive stocks helped propel Hong Kong higher, while Tokyo slumped for the fourth straight session. European markets were generally higher. That left the Dow Jones World Stock Index down 0.25 point, or 0.12%, to 213.43. Excluding the U.S., the index fell 0.44 point, or 0.28%, to 156.64.</br></br>A big problem for Asian airlines is that the torrid growth that rapidly revived their financial health starting in mid-1999 seems to have run its course. For many of the region's carriers, load factors, or the share of seats and cargo space sold, started falling in the last quarter from historic peaks reached in mid-2000.