[Edaily Reporter Kim Kyung-eun] On the 12th, KB Securities issued a forecast that #KoreanAir’s profits would rise due to higher cargo rates and the merger with Asiana Airlines. Accordingly, it maintained its “Buy” investment rating and a target price of 36,000 won.

In a report released that day, Kang Seong-jin, an analyst at KB Securities, stated, “Freight rates have surged to their highest levels since the COVID-19 pandemic, significantly offsetting the burden of rising oil prices,” adding, “The merger with Asiana Airlines is expected to be an event that could increase net income by 30% in the long term.”

Air cargo rates have risen to their highest levels since the COVID-19 pandemic. By the end of May, cargo rates had recovered to their highest levels since November 2022.

Analyst Kang explained, “This is the result of a surge in artificial intelligence (AI) investment coupled with a reduction in airlines’ cargo transport capacity due to the war,” adding, “AI-related cargo consists of high-value products, so there is little resistance to rising freight rates.”

KB Securities projected that Korean Air’s second-quarter cargo rates would reach 669 won, a 35.3% increase from the same period last year. The firm explained that this rate increase is sufficient to more than cover the 30% rise in costs driven by higher fuel prices.

Researcher Kang explained, “The rise in air cargo rates will be a decisive trigger for Korean Air’s stock price,” noting, “Korean Air ranks seventh globally in terms of air cargo volume and fourth when excluding dedicated cargo carriers.”

He further noted, “Global investors often show more interest in Korean Air when the cargo market is strong rather than when the passenger market is strong,” and predicted, “While Korean Air’s international passenger revenue per seat is expected to fall slightly short of forecasts due to price competition on Japan routes from low-cost carriers (LCCs), the cargo market is expected to be stronger than anticipated.”

The firm raised its second-quarter standalone and full-year consolidated operating profit forecasts by 260.1% and 14.8%, respectively, compared to previous estimates. The full-year operating profit forecast is 94.1% higher than the market consensus.

The merger with Asiana Airlines is also seen as an opportunity to boost Korean Air’s profits.

Analyst Kang noted, “Korean Air is scheduled to complete its merger with Asiana Airlines this coming December,” adding, “In the long term, the merger with Asiana Airlines is expected to add 326.5 billion won to Korean Air’s net income.”