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Singapore Air, EVA shares decline

Shares of Korean Air Co, Singapore Airlines Ltd and other Asian carriers fell on concern a war in Iraq will start as early as this week, pushing up fuel costs and hurting travel demand.

Korean Air shares fell as much as 9 percent to 8,900 won in Seoul, while its competitor Asiana Airlines Inc fell as much as 12 percent, the daily limit, to 2,000 won.

Singapore Air fell 4.5 percent to S$9.65, while China Eastern Airlines Corp fell as much as 3.7 percent to 4.69 yuan in Shanghai.

"There is consensus war may start this week, pushing airline shares lower this morning," said Song Jae-hak, an analyst at LG Investment & Securities Co in Seoul.

The International Air Transport Association has said that a US-led war in Iraq may cause global traffic to repeat its plunge of between 15 percent and 20 percent during the 1991 Gulf War.

"The markets are nervous, and it's quite clear that the US will go to war," said Mark Tan, an investment analyst at UOB Asset Management Ltd, which manages about S$12 billion (US$6.9 billion) in assets.

Some Asian airlines' shares were also hurt by concern that travel may decline after reports of more than 150 suspected cases of a pneumonia-like respiratory illness.

"The mysterious illness will scare away some tourists, cutting airlines' business," said Jerry Chen, who manages NT$3.5 billion (US$101 million) at First Global Investment Trust Co (元大投信).

The World Health Organization issued an emergency advisory for travelers at the weekend to alert them of the illness.

Shares of EVA Airways Corp (長榮航空) fell as much as 6.3 percent to NT$11.95, while its rival China Airlines Co (中華航空) fell as much as 6.8 percent to NT$13.05. Shares of Cathay Pacific Airways Ltd (國泰航空) fell as much as 4.4 percent to HK$10.85.
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