Analysts support Asia Pacific airline stocks

Asia Pacific airline stocks were mixed on Friday, despite several broker upgrades. Air China (-3.3%) and Korean Air (-2.2%) fell, while Malaysia Airlines and China Southern gained 2.9% and 3.8%, respectively.

RBS Equities evaluated Qantas from an environmental, social and governance (ESG) standpoint, concluding the airline is “being proactive in positioning itself to maintain a sustainable long-term business in the face of a challenging industry”. The RBS analysis suggests a potential upside of 24% to its valuation (AUD3.16 per share), incorporating the carrier’s targeted fuel efficiency gains, but offset by potential carbon costs. The broker retained its ‘buy’ recommendation on Qantas.

Nomura International meanwhile stated Asian airline stocks are trading at attractive levels and they are expected to perform better in 2H2010, due to stronger demand for air travel. Nomura has ‘Buy’ recommendations on EVA Air (shares -1.1% on Friday), Cathay Pacific (-0.1%) and Singapore Airlines (-2.3%).

Asia Pacific selected airlines daily share price movements (% change): 18-Jun-2010