[Edaily Reporter Kim Kyung-eun ] On the 15th, KB Securities raised its target price for KoreanAirLines(003490)from 36,000 won to 40,000 won—an 11.1% increase—stating that the company’s operating profit this year is expected to be nearly double the market forecast. The firm maintained its “Buy” rating and designated the stock as its top pick in the transportation sector. It estimated that KoreanAirLines’ operating profit for this year would reach 1.7 trillion won, a 55.5% increase from the previous year.

Kang Seong-jin, an analyst at KB Securities, stated, “The air cargo market is performing better than previously expected due to expanded investment in artificial intelligence (AI).”

KoreanAirLines’ second-quarter operating profit on a standalone basis was 261.8 billion won, a 34.4% decrease from the same period last year, but it exceeded the market consensus by 319.9%. This was due to air cargo rates surging 41.8% year-over-year, which largely offset the cost burden caused by rising fuel prices.

For the second half of the year, the company forecast that air cargo rates would remain at current levels, as falling international oil prices would lower fuel costs while demand for AI-related cargo continues. Accordingly, it expects profitability to improve further.

In particular, the analysis noted that expanding AI investment in the U.S. is driving the air cargo market. From April to May of this year, U.S. imports of AI-related items (semiconductors, servers, related equipment, etc.) increased by 99.1% compared to the same period last year. During the same period, South Korea’s air cargo export volume rose by 9.2%, and air cargo export volume at Taiwan’s Taoyuan International Airport increased by 18.3%. On a global scale, the growth rate of air cargo volume is outpacing the growth rate of transport capacity, leading to the forecast that strong freight rates will continue.

Researcher Kang added, “While falling international oil prices and the return to normal operations by Middle Eastern airlines could lead to lower freight rates in the short term, increased demand for AI-related cargo and the year-end peak season effect will offset these factors,” noting, “Freight rates are actually expected to rise as we approach the end of the year.”