Founder & Managing Director, AIR Control Tower, AIR Control Tower

Neil Glynn

Founder & Managing Director, AIR Control Tower

AIR Control Tower

AIR Control Tower is an independent research and analysis platform. Its mission is to provide impactful insight and analysis across the global airline industry at a company and market level via detailed financial models to aid decision making for key stake holders at a time when risks have seldom, if ever, been higher and the global sector grapples with the imperative of funding de-carbonisation. Unique analysis forecasting global carrier-level earnings/cash flows, and restructuring/de-leveraging prospects, is designed to dynamically assess the health of the industry, predict surprises and identify potential requirements for third party support.

Insights on the global airline industry

Equity Bottom-Up

<ul>
<li>Reuters reported on the Friday that the European Commission is to accept concessions of four European route divestitures and the sale of Asiana's cargo business.</li>
<li>The EC had set a preliminary decision deadline of 14 February.</li>
<li>US and Japanese approvals are still required, while it remains to be seen who might acquire Asiana Cargo.</li>
</ul>


Reuters reported on the Friday that the European Commission is to accept concessions of four European route divestitures and the sale of Asiana's cargo business.
The EC had set a preliminary decision deadline of 14 February.
US and Japanese approvals are still required, while it remains to be seen who might acquire Asiana Cargo.


Korean Air: European Approval for Asiana Merger Reportedly Imminent

<ul>
<li>We forecast EBITDAR of KRW3.35trn for Korean Air in 2023 (KRW3.8trn previously) with EBITDAR/ATK up 50% on 2019/32% on 2018. We remain at KRW2.9trn in 2024 (EBITDAR/ATK +28% vs 2019).</li>
<li>Unwinding cargo yields may fully eliminate earnings gains but cost management safeguards future prospects despite Asiana merger uncertainty.</li>
<li>Cost inflation management inflected negatively in 3Q as labour costs rose – control crucial as market conditions normalize and low cost competitors expand.</li>
</ul>


We forecast EBITDAR of KRW3.35trn for Korean Air in 2023 (KRW3.8trn previously) with EBITDAR/ATK up 50% on 2019/32% on 2018. We remain at KRW2.9trn in 2024 (EBITDAR/ATK +28% vs 2019).
Unwinding cargo yields may fully eliminate earnings gains but cost management safeguards future prospects despite Asiana merger uncertainty.
Cost inflation management inflected negatively in 3Q as labour costs rose – control crucial as market conditions normalize and low cost competitors expand.


Korean Air: Earnings Remain Elevated but Premium May Continue to Unwind as Cargo Yields Re-Set

Global Mobility/Transport, Equity Long-Short

Mohshin Aziz

<ul>
<li>
<a href="https://www.smartkarma.com/entities/korean-air-lines-co-ltd" target="_blank" data-smartkarma-citation="entities:11048:1" rel="noopener">Korean Air Lines (003490 KS)</a> is cheap, against peers and its own history. The impending merger with Asiana Airline is a major overhang  </li>
<li>Business is good, with steady passenger loads and yields, and cargo showing decent signs of recovery. Lower fuel prices could surprise on the upside </li>
<li>Target Price KRW23,868 based on FY24 P/BV of 0.81x (1SD below mean). Too little upside for the level of uncertainty. PASS   </li>
</ul>



Korean Air Lines (003490 KS) is cheap, against peers and its own history. The impending merger with Asiana Airline is a major overhang  
Business is good, with steady passenger loads and yields, and cargo showing decent signs of recovery. Lower fuel prices could surprise on the upside 
Target Price KRW23,868 based on FY24 P/BV of 0.81x (1SD below mean). Too little upside for the level of uncertainty. PASS   


Korean Air (003490 KS): Cheap, but a Value Trap

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

<ul>
<li>Several US customs brokers have been suspended under new, tighter rules</li>
<li>The new rules could make 'de minimis' imports slightly more difficult</li>
<li>Whether it lists in London or NYC, additional rule changes could threaten SHEIN</li>
</ul>


Several US customs brokers have been suspended under new, tighter rules
The new rules could make 'de minimis' imports slightly more difficult
Whether it lists in London or NYC, additional rule changes could threaten SHEIN


SHEIN: Several US Customs Broker Suspensions Tied to Tighter 'de Minimis' Rules

Thematic (Sector/Industry)

<ul>
<li>In aggregate, traffic among the Big-3 Chinese airlines was up 67% YoY in February and +18% vs 2019. Incontestable proof that China has regained its air travel mojo. </li>
<li>Published March schedules show total implied capacity is 31% higher YoY and 9% higher than 2019 levels. This is driven by domestic travel, international remains depressed. </li>
<li>Driven by domestic travel, international remains depressed. POSITIVE for China Eastern and other North Asian carriers that provide the missing North America link. </li>
</ul>


In aggregate, traffic among the Big-3 Chinese airlines was up 67% YoY in February and +18% vs 2019. Incontestable proof that China has regained its air travel mojo. 
Published March schedules show total implied capacity is 31% higher YoY and 9% higher than 2019 levels. This is driven by domestic travel, international remains depressed. 
Driven by domestic travel, international remains depressed. POSITIVE for China Eastern and other North Asian carriers that provide the missing North America link. 


China BIG-3 Mainland Airlines Traffic 18% Higher than 2019!

South Korea

Korean Air Lines Co., Ltd. operates air transportation services.  The Company's services include passenger and cargo transportation, aircraft maintenance, and air catering.  Korean Air Lines provides domestic and international airline services.

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Korean Air Lines (003490 KS)

Korean Air: European Approval for Asiana Merger Reportedly Imminent

The Korean Air-Asiana merger saga continues but Europe is reportedly set to provide its approval. The US and Japan also need to approve the deal,...

Neil Glynn

Korean Air: Earnings Remain Elevated but Premium May Continue to Unwind as Cargo Yields Re-Set

Detailed earnings recovery and cost inflation management analysis which inform future earnings and cash flow prospects as Korean Air awaits a...

Neil Glynn

Korean Air (003490 KS): Cheap, but a Value Trap

Korean Air Lines is undervalued versus peers and own history due to merger overhang. Too much at stake in the hands of the regulators, which we...

Mohshin Aziz

SHEIN: Several US Customs Broker Suspensions Tied to Tighter 'de Minimis' Rules

US Customs and Border Protection has tightened the rules under which SHEIN and Temu import cheap goods into the US. As a result, six US customs...

Tracking Traffic

China BIG-3 Mainland Airlines Traffic 18% Higher than 2019!

Chinese airlines see significant increase in traffic, with domestic travel driving growth while international remains depressed. China's air...

Mohshin Aziz

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Korean Air: European Approval for Asiana Merger Reportedly Imminent

The Korean Air-Asiana merger saga continues but Europe is reportedly set to provide its approval. The US and Japan also need to approve the deal,...

Neil Glynn

Korean Air: Earnings Remain Elevated but Premium May Continue to Unwind as Cargo Yields Re-Set

Detailed earnings recovery and cost inflation management analysis which inform future earnings and cash flow prospects as Korean Air awaits a...

Neil Glynn

Korean Air (003490 KS): Cheap, but a Value Trap

​Korean Air Lines is undervalued versus peers and own history due to merger overhang. Too much at stake in the hands of the regulators, which we...

Mohshin Aziz

SHEIN: Several US Customs Broker Suspensions Tied to Tighter 'de Minimis' Rules

US Customs and Border Protection has tightened the rules under which SHEIN and Temu import cheap goods into the US. As a result, six US customs...

Tracking Traffic

China BIG-3 Mainland Airlines Traffic 18% Higher than 2019!

​Chinese airlines see significant increase in traffic, with domestic travel driving growth while international remains depressed. China's air...

Mohshin Aziz

Korean Air Lines is undervalued versus peers and own history due to merger overhang. Too much at stake in the hands of the regulators, which we...

Chinese airlines see significant increase in traffic, with domestic travel driving growth while international remains depressed. China's air...