NH Investment & Securities on the 14th said the integration synergy effects for Korean Air Lines, which has begun merger procedures with Asiana Airlines, are expected to appear in earnings starting in the fourth quarter of this year. Korean Air Lines' previous closing price was 25,750 won.
Korean Air Lines' acquisition of Asiana Airlines has entered the final stage of a merger after six years.
On the previous day (the 13th), Korean Air Lines announced in a filing that it would absorb and merge its subsidiary Asiana Airlines. The merger ratio is 1 to 0.2736432, meaning 0.2736432 new Korean Air Lines shares will be granted for each Asiana Airlines share.
Korean Air Lines plans to merge on Dec. 16 after approval at an Asiana Airlines shareholders meeting, and the new shares will be listed on Jan. 4, 2027.
Jung Yeon-seung, an analyst at NH Investment & Securities, said, "From the winter schedule, operations are expected to shift to an integrated model," adding, "Afterward, the low-cost carriers Jin Air, AIR BUSAN and AIR SEOUL will be integrated, and subsidiaries such as Korea Airport Service and Asiana Airport will also proceed with integration procedures in sequence."
It was analyzed that the size of new shares to be issued in the process of Korean Air Lines acquiring Asiana Airlines amounts to only 5.5% of Korean Air Lines' total shares. Asiana Airlines equity held by Korean Air Lines and Asiana Airlines' treasury shares are excluded from the new share issuance.
Jung said, "We do not see this as a meaningful per-share value dilution factor," and added, "After the merger, overlapping infrastructure—including aircraft maintenance, ground handling, in-flight meals and overseas sales networks—can be consolidated, and the resulting fixed-cost savings and economies of scale will begin in earnest."
They also saw ample room to improve profitability by reorganizing the international network and expanding transfer demand.
Jung said, "From the fourth quarter, when some integrated operating effects are reflected, expectations for synergy will gradually rise," adding, "The merged entity is expected to establish itself as the unrivaled No. 1 player in Korea's aviation market."
In particular, they projected it will become possible to attract inbound demand, lead premium demand and improve earnings stability.
Jung said, "As these synergy effects are confirmed, the valuation of Korean Air Lines, which had been relatively undervalued versus airlines in the Asia-Pacific region, is expected to be reassessed (re-rated)."