KB Securities reported on September 23 that Korean Air is expected to see significant profit growth next year due to structural increases in passenger and cargo fares, along with improved performance from Asiana Airlines. The firm maintained a 'Buy' rating and designated Korean Air as its top pick in the transportation sector, raising the target price by 5% to 42,000 won.
Analyst Kang Sung-jin noted, "As foreign interest in visiting Korea rises, passenger fares are structurally increasing, and with expanded investments in artificial intelligence (AI) and delays in aircraft production, cargo fares are also expected to remain high. Starting from the third quarter of this year, the operating profit and loss of our subsidiary, Asiana Airlines, is also projected to improve."
KB Securities forecasts that Korean Air's consolidated operating profit will decrease by 5% year-on-year to 1.1 trillion won this year. Despite an unfavorable business environment characterized by high exchange rates, oil prices, and interest rates, the airline's profit resilience has been confirmed.
Looking ahead, the firm anticipates an even larger improvement in performance next year. For 2027, KB Securities estimates Korean Air's operating profit will reach 2.7 trillion won, a 158.9% increase compared to the previous year, exceeding market consensus by 21.2%. The firm has also revised its 2027 operating profit estimate upward by 7.5% after lowering its forecast for the won-dollar exchange rate.
Kang highlighted several factors contributing to the improved profit generation capacity of Korean Air: an increase in overseas ticket prices due to rising foreign visits and travel spending in Korea, increased demand for air cargo driven by expanded AI investments and delays in new aircraft production, and the conclusion of merger-related costs for Asiana Airlines, along with improvements in passenger market conditions and cargo business efficiency.
He emphasized that the current performance outlook is based on high exchange rates, oil prices, and interest rates. KB Securities' assumptions for 2027 include a won-dollar exchange rate of 1,375 won, a fuel price of $125 per barrel, and a corporate bond yield for Korean Air of 4.75%.
Kang stated, "Korean Air's profit generation capability has significantly improved. If external factors such as exchange rates, oil prices, and interest rates return to average levels, the operating profit outlook could be further revised upward."
* This article has been translated by AI.
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