Hana Securities said on the 19th that Korean Air Lines is expected to continue posting operating profit from the third quarter. It maintained a Buy rating and a target price of 32,000 won. Korean Air Lines' closing price the previous day was 25,550 won.
Korean Air Lines recently announced in a filing that Dec. 16 this year will be the merger date with Asiana Airlines. The merger ratio is 1 to 0.2736432.
Ahn Do-hyun, an analyst at Hana Securities, said, "Asiana Airlines is bound to post losses if operated as a separate brand, but after integrating brands with Korean Air Lines, its earnings per share (EPS) contribution is expected to turn positive," noting expected benefits from streamlining overlapping routes after integration, stronger bargaining power from the airline's larger scale, and selling, general and administrative expense savings.
While repainting and uniforms were expected to incur rebranding expense, the impact was projected to be limited given that the integrated carrier's operating profit is estimated at 1.9 trillion won in 2027.
Regarding the recent surge in jet fuel prices due to the Iran war, the analysis said the key is to recognize the structural ability to pass fuel costs on to passengers rather than focusing on temporary profit deterioration.
Ahn said, "Korean Air Lines is the only carrier in Korea with a structure that can pass on most fuel costs," explaining, "There are not many competitors on long-haul routes, making price increases easier; 30% of fuel costs are hedged with derivatives; and operational reliability is high, leading to strong preference even on short-haul routes."
Accordingly, excluding the second quarter—when revenue will be recognized at ticket prices issued before the war despite the fuel price surge—operating profit is expected to remain in the black from the third quarter.
Ahn said, "The share price fell as it reflected concerns over higher fuel costs after the war, and now is a good time to buy," adding, "Looking to 2028, the integrated Korean Air Lines' operating profit is expected to rise to 2.7 trillion won, with net profit around 1.5 trillion won."