[Edaily Reporter Shin Ha-yeon ] On the 29th, Yuanta Securities Korea projected that Korean Air ( KoreanAirLines(003490)) would continue to demonstrate strong earnings resilience, supported by robust demand in both the passenger and cargo sectors, even amid increasing oil price volatility. The firm maintained its “Buy” rating and raised the target price from 38,000 won to 40,000 won. This represents an upside potential of 26% compared to the previous trading day’s closing price.

Choi Ji-woon, an analyst at Yuanta Securities Korea, projected that KoreanAirLines’ third-quarter standalone revenue would reach 5.0759 trillion won, a 26.6% increase year-over-year, while operating profit would rise 30.5% to 491 billion won. The operating profit margin is expected to be 9.7%. Operating profit is forecast to meet market expectations.

The analysis suggests that while growth in international passenger and air cargo revenue drove revenue expansion, lower jet fuel prices and a weaker won against the dollar alleviated cost pressures, leading to an improvement in profits compared to the previous quarter.

International passenger revenue is estimated to reach 2.8528 trillion won, a 24.1% increase year-over-year. Third-quarter international fare yield is expected to rise 17% year-over-year to 141 won, while the load factor (L/F) is projected to improve by 2 percentage points to 86%. The report explains that while short-haul routes, primarily to China and Japan, showed strong growth in passenger traffic, demand for long-haul and connecting flights also remained robust.

Researcher Choi explained, “With strong growth in passenger traffic on short-haul routes—primarily to China and Japan—this quarter, coupled with continued strong demand for long-haul and connecting flights, we believe both fares and load factors have improved compared to the same period last year.”

Air cargo is also expected to remain strong. Third-quarter cargo revenue is projected to reach 1.4759 trillion won, a 38.4% increase from the same period last year. While the cargo rate is forecast to drop 6% quarter-over-quarter to 664 won due to lower fuel surcharges, it is expected to remain 35% higher than the same period last year.

Researcher Choi stated, “We expect cargo profitability to remain robust as strong demand for high-value-added cargo, such as semiconductors, continues.”

The firm expects downside risk to earnings to be limited even if oil price volatility increases. This is because demand for long-haul and premium services remains robust in the passenger segment, while the cargo segment has secured stable volume through the expansion of long-term contracts. The cargo segment’s relatively strong ability to pass on costs and the easing of foreign currency cost burdens due to the strong Korean won are also expected to support profit resilience.

In the medium to long term, attention is focused on the profitability improvements expected following the merger with Asiana Airlines this coming December. The analysis explains that there is room for fare improvements as KoreanAirLines’ fare structure is applied to Asiana Airlines’ existing routes, and network efficiency is expected to improve through the consolidation of overlapping routes and schedule adjustments. Cost synergies, such as the integration of procurement and contracts and the streamlining of maintenance, are also anticipated.

Analyst Choi stated, “We expect network efficiency to improve through the consolidation of overlapping routes and schedule adjustments,” adding, “Combined with cost synergies from the integration of procurement and contracts, as well as maintenance efficiency improvements, the consolidated entity’s profit resilience in 2027 is projected to improve compared to this year.”

In fact, Yuanta Securities Korea raised its 2027 consolidated operating profit forecast for KoreanAirLines by 14.7%, from 1.917 trillion won to 2.198 trillion won. While it projected this year’s consolidated operating profit at 803 billion won, it forecast a return to the 2 trillion won range by 2027.

Analyst Choi noted, “We are revising our earnings estimates upward,” adding, “We maintain our ‘Buy’ rating and raise the target price to 40,000 won, calculated by applying a target price-to-book ratio (PBR) of 1.2 times to the 12-month forward book value per share (BPS) of 33,725 won.”