Korean Air Financial Analysis
Evaluated Korean Air through macroeconomic, industry, financial-ratio, and multiple valuation frameworks, focusing on model conflict under uncertain FCF assumptions.
Period · Spring 2025
Role · Individual project
01 · Business / research question
The question
How should Korean Air be evaluated when post-pandemic recovery, large investment needs, leverage, and uncertain cash-flow assumptions cause valuation methods to diverge?
02 · Evidence
What the analysis used
03 · Analysis
How the work progressed
- 01
Establish the context
Reviewed post-pandemic economic conditions, airline recovery, fuel, FX, demand, and integration risks.
- 02
Assess operating and financial trends
Analyzed profitability, efficiency, liquidity, leverage, and interest coverage across 2020-2024.
- 03
Compare valuation methods
Applied DCF, APV, and peer multiples using an estimated WACC of approximately 2.8%.
- 04
Diagnose divergence
Used sensitivity analysis and reverse engineering to identify why absolute and relative values conflicted.
04 · Interpretation
Main insight
Selected CAPEX and working-capital assumptions produced negative FCF, making DCF and APV negative or unstable.
Relative valuation produced a more positive interpretation.
The central lesson was the sensitivity and conflict across methods—not a headline target price.
05 · Practical decision
Decision value
When valuation methods diverge, decision-makers need an assumption audit rather than a mechanical average or an attractive headline number.
06 · Validation
Limitations and next checks
- •The unavailable valuation workbook should be recreated and audited.
- •Formulas, peers, units, dates, estimates, and target-price arithmetic require verification before public use.
- •Exact financial and market source dates should be documented.
07 · Visual evidence
Evidence, with boundaries
2020–2024 profitability trends
Reported evidence| Year | Net margin | ROE | ROA |
|---|---|---|---|
| 2020 | -3 | -6.9 | -0.9 |
| 2021 | 6.4 | 8.4 | 2.2 |
| 2022 | 12.3 | 18.6 | 5.96 |
| 2023 | 7 | 11.5 | 3.5 |
| 2024 | 7.7 | 12.6 | 3.17 |
The lines reproduce net margin, ROE, and ROA values reported in the classroom report. They show the reported recovery and variation, but the underlying workbook has not been audited and the chart is not investment advice.
Source · Korean Air Financial Analysis report · profitability table
Valuation-method divergence
Reported evidenceDCF
Highly sensitive to FCF · negative/unstable
APV
Operating-base weakness outweighed tax shield
Multiples
More positive relative market comparison
In the report, negative FCF assumptions made DCF and APV unstable or negative, while multiples produced a more positive relative view. The panel shows method conflict; it does not validate a target price or investment action.
Source · Korean Air Financial Analysis report · DCF, APV, and multiples sections
Sensitivity and target-price arithmetic
Pending verificationPending valuation audit
Publish a sensitivity table only after rebuilding and checking the DCF, APV, and multiples inputs and formulas.
Numeric tables exist in the report, but the valuation workbook, formulas, peer set, units, and dates have not been audited for public use. Numeric sensitivity and the conditional KRW 80,000 classroom reference are not presented as visual conclusions.