April 25, 2024

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[THE INVESTOR] Korean Air’s earnings in the second quarter will be below expectations, said Korea Investment and Securities on July 5, lowering the target price to 39,000 won (US$34.90) from 44,000 won, though maintaining a “buy” recommendation. 

The airline’s revenue will increase 6 percent on-year to 3.07 trillion won, but operating profits will decrease 24 percent to 131.7 billion won, 19 percent lower than market consensus, burdened by rising oil prices and one-off costs including incentives, said analyst Choi Go-un.

The baseline is high due to the several holidays in May last year, while the average jet fuel price hiked 44 percent on-year and, being low season, there has been significant price resistance against fuel surcharges, not letting the company distribute the price rise, said the analyst. 

Passenger demand still remains solid she said, underlining that the number of passengers for international flights in April and May rose 11 percent on-year and the number has been advancing faster every quarter since the fourth quarter last year. 

By Hwang You-mee (glamazon@heraldcorp.com)