iM Securities analyzed on the 14th that Korean Air's cargo sector performance would be significantly affected by the United States' tariff policy. However, it noted that the effects of the merger with Asiana Airlines are expected in the medium to long term. The target stock price has been downgraded from the previous 31,000 won to 29,000 won, although the investment opinion remains 'buy.'

At the event Rising Night held at the Korean Air hangar in Gangseo, Seoul last month, a Boeing 787-10 aircraft with a new corporate image (CI) is being unveiled./Courtesy of News1

Bae Se-ho, an analyst at iM Securities, stated, "Korean Air's solid revenue from the passenger sector continues, but due to the impact of the tariff policy, the cargo sector's estimates have been significantly revised downward," adding, "Although the target stock price is adjusted downward based on the performance estimates, the medium to long term outlook remains positive."

Korean Air's revenue for the first quarter of this year was 4 trillion won, with an operating profit of 350.9 billion won, which slightly fell short of market expectations. In particular, the operating profit was 19% lower than market expectations, reflecting the poor cargo volume and increased expenses.

Cargo revenue was estimated at 1.1 trillion won, with sales from China expected to increase by 9% compared to the same period last year, while sales from North America and Europe are estimated to have decreased by 14% and 26%, respectively.

Operating expenses were 3.6 trillion won, an increase of 6.5% compared to the same period last year. Although fuel costs decreased, overall expenses, including labor costs, airport-related expenses, and depreciation, all rose. In particular, maintenance costs increased by 70 billion won, up 65% compared to the same period last year.

Bae noted, "Due to the United States' reciprocal tariff policy, performance uncertainty in the cargo division has increased," stating, "Notably, the share of sales from China in the cargo division reached 36% in the first quarter."

He added, "In the last three years, cargo sales from China have increased, mainly driven by online shopping volumes," noting, "The U.S. decision to abolish the duty-free system for low-value cargoes under $800 is expected to negatively impact cargo volumes."