Asian airline shares nosedive as recession panic sets in

Global share markets have been savaged this week as each wave of economic data points to a deep and lasting recession in the major world economies. This increasing realisation sent oil prices tumbling below USD50 for the first time since May 2005. For many Asian carriers, this will magnify paper losses on wrong-way bets on fuel hedges, but for all airlines it signifies sharply weaker economic prospects, and therefore, weaker demand.

The only Asian airline shares to advance on ‘Black Thursday' were Air New Zealand (after announcing job losses), AirAsia (on rumours the airline will be taken private, possibly next week), Shanghai Airlines (on prospects of a merger/government bailout) and Virgin Blue (a recent target of buying by founders of a rival carrier).

Asia Pacific selected airlines daily share price movements (% change): 20-Nov-08