Airline Stocks: A Smooth or Rocky Road in 2020?

Even though a long vacation period had just passed a couple of weeks ago with the high numbers of passengers who traveled by plane, why the airlines’ stocks are in the midst of the profit growth slowdown and less-expectation of investors?

The analyst suggests that there are 2 principal factors; first, the primary capital, oil, the price is still high and second, the intense competition of plane ticket discount. Those 2 factors impact investors’ confidence in the entire airline industry.

Nok Airlines Public Company Limited (NOK) and Asia Aviation Public Company Limited (AAV) are the most affected by this situation as a consequence of intensive competition.

Air Asia, the number one low-cost airline, experienced a net loss of 401 million baht in the first nine-month of 2019 while last year in the same period, Air Asia was satisfied with an earning of 339 million baht.

Nok Air, the overall performance was better if compared with the same period of last year, but still faced a net loss of 1,616 million baht.

Meanwhile, Bangkok Airways Public Company Limited (BA), classifying its business as boutique airline, confronted the net loss of 131 million baht; conversely, last year Bangkok Airways had net income of 663 million baht.   

As Thai Airways International Public Company Limited (THAI) lost its profit continuously with a net loss of 11,119 million baht, increased 4,082 million baht from the previous year.        

The analyst has emphasized, judging by airlines’ profit and loss in 2019, that the performance of this year could still be as bad as last year. 

Following the turnover of all many airlines, investors have lost their confidence and sold airline stocks, caused the airline’s share price to plunge dramatically. In the last three months, AAV dropped 27.63%, BA fell 22.41% and THAI decreased 24.73%, but NOK dropped only 1.89%.