[Click eStock] "Korean Air, Q4 Last Year Earnings... Exceed Market Expectations"

NH Investment & Securities analyzed on the 10th that Korean Air's fourth-quarter results last year exceeded market expectations. The investment opinion 'Buy' and the target price of 33,000 KRW were maintained.

Korean Air recorded sales of 4.5018 trillion KRW and an operating profit of 508 billion KRW in the fourth quarter of last year. This represents increases of 2.5% and 78.7%, respectively, compared to the same period the previous year. Yeonseung Jeong, a researcher at NH Investment & Securities, said, "The company posted solid results that slightly exceeded market consensus," adding, "Despite increased labor costs such as safety incentives, favorable factors like lower fuel costs and strong freight rates contributed to the good performance."

He added, "In the non-operating segment, the increase in overseas ticket sales led to a higher proportion of natural hedging, and an active foreign exchange hedging policy meant that despite the sharp rise in the KRW-USD exchange rate at the end of the year, non-operating expenses were not significant," and forecasted, "Although there may be temporary volatility in non-operating expenses due to exchange rate fluctuations following the Asiana Airlines consolidation, Korean Air's proactive hedging policy and increased overseas ticket sales are expected to gradually stabilize the situation."

NH Investment & Securities analyzed that uncertainties exist this year for Korean Air due to cargo and passenger route adjustments related to the integration in the first half of the year. He said, "Corrective measures such as slot returns due to the Asiana Airlines integration are scheduled to be implemented within the first half," adding, "In Europe, major routes have already been transferred to T'way Air," and "For U.S. routes, which are liberalized, there is no significant need to return slots."

He explained, "In Japan, except for the Gimpo-Haneda route, slots to be returned are limited due to liberalized routes," and "There may be slot return issues on some routes in China and Southeast Asia, but supply capacity is expected to slightly increase through new route expansions, and corrective measures are expected to be completed within the first half."

He emphasized that the key to future stock prices is the direction of fares. He said, "In the short term, uncertainties exist due to corrective measures and tariff impositions," and stressed, "The key to future stock prices is the direction of international and cargo fares of the integrated Korean Air."

He explained, "The Asiana Airlines integration process has begun, and operational cost efficiency is being improved through route rationalization and efficiency expansion," adding, "To maximize these efficiency measures, fare defense is essential. Since a fare decline is expected after tariff imposition, flexible supply adjustments are necessary to defend fares."