[Click e-Stock] "Korea Airport Service, Synergy from Korean Air and Asiana Airlines Merger"

On September 3, Hana Securities stated that it expects Korea Airport Service to achieve greater cost efficiency as a result of the merger between Korean Air and Asiana Airlines.

Korea Airport Service, a subsidiary of Korean Air, is responsible for ground handling operations. Ground handling includes all work performed before and after aircraft operations, such as aircraft towing, baggage and cargo transport and loading, in-flight meal supply, and refueling operations. In the first half of this year, Korea Airport Service recorded a 42% market share in passenger handling and a 51% share in cargo handling.

In the first half of this year, Korea Airport Service posted sales of 317.2 billion won and operating profit of 26 billion won. Sales increased by 6% compared to the same period last year, while operating profit decreased by 11%.

Ahn Dohyun, a researcher at Hana Securities, explained, "Korean Air and Asiana Airlines are scheduled to merge by the end of next year," adding, "There is growing interest in the synergy effects from the integration of subsidiaries."

He continued, "Korea Airport Service operates the same type of business as Asiana Airport," and added, "With the dissolution of Asiana Airlines, there is a high possibility that the two companies will be integrated."

He also noted, "Asiana Airport recorded sales of 246.1 billion won and net profit of 20.2 billion won last year," and analyzed, "After the integration, the efficiency of ground handling personnel and capital is expected to improve."

However, Ahn advised, "The majority of ground handling costs are labor expenses," and said, "The effects of operating leverage and cost reduction should be considered over the long term." He also mentioned, "The company holds approximately 100 billion won in cash-equivalent assets," and suggested, "To fundamentally enhance corporate value, it is necessary to actively utilize these cash-equivalent assets."