Korean Air Spreads Its Wings on 'With Corona' Optimism

[Asia Economy Reporter Song Hwajeong] Korean Air's stock price has recently shown strength due to strong third-quarter earnings this year and expectations for 'With Corona' (gradual return to daily life).

According to the Korea Exchange on the 24th, Korean Air's stock price recovered to the 34,000 won level the previous day. It is the first time in about three months since June that Korean Air's stock price reached 34,000 won. After hitting a 52-week high of 35,100 won intraday on June 10, Korean Air's stock price had been on a downward trend.

Recently, with growing expectations for third-quarter earnings and continuous inflow of institutional buying, the stock price has successfully rebounded. Institutions have been net buyers of Korean Air for seven consecutive trading days up to the previous day.

According to financial information provider FnGuide, the consensus operating profit forecast for Korean Air in the third quarter is 160.2 billion won, expected to turn profitable compared to the same period last year. Kang Sungjin, a researcher at KB Securities, said, "Korean Air's third-quarter operating profit is expected to be 347.4 billion won, exceeding the consensus by 142.5%," adding, "Air cargo rates are estimated to reach 589.5 won, 24.1% higher than previously expected." KB Securities has raised its operating profit forecasts for Korean Air by 147.9% for this year and 46.8% for next year. NH Investment & Securities also raised its annual operating profit estimate for Korean Air this year from 329.9 billion won to 892.4 billion won, a 171% increase. Jeong Yeonseung, a researcher at NH Investment & Securities, explained, "This reflects strong air cargo rates, recovery of passenger demand on medium- and long-haul routes in the second half, and an increase in long-term fare levels due to premiumization of passenger demand," adding, "The strong performance from cargo not only increases profits but also leads to debt reduction and capacity for new aircraft introduction, which are factors for long-term financial strength improvement."

From next year, benefits from With Corona are expected. Park Seongbong, a researcher at Hana Financial Investment, said, "As vaccination accelerates worldwide and discussions on the With Corona era begin due to the prolonged COVID-19 situation, countries adopting vaccine passports will gradually expand," adding, "In Korea, from the second quarter of next year, the stability of overseas travel will gradually be ensured, and international flight demand will slowly recover."