The target company is Korea’s only dedicated cargo airline, operating short-haul cargo routes primarily across East and Southeast Asia, including China and Japan.
“Growth Potential of the Air Cargo Market and Key Due Diligence Areas”
Global air cargo volumes have historically grown steadily at about 2–3% in line with rising trade. However, factors such as maritime supply chain disruptions, reduced passenger flights, and COVID-19 have accelerated growth above 10% since 2020. Long-term prospects indicate annual growth of over 4% as global trade remains robust and air cargo solidifies its role as a stable alternative to maritime shipping disruptions. While automotive parts, IT devices, and semiconductors dominate air cargo shipments, categories now extend to cosmetics, daily goods, pharmaceuticals, and fresh food.
For the private equity (PE) firm, growth in perishable goods due to expanded cold chain capacity, rising demand from high-value industries like semiconductors, automotive electronics, and pharmaceuticals, as well as the surge in e-commerce, reinforce a positive outlook. Incheon Airport’s advanced trade infrastructure and the potential for this nascent player to expand market share against major domestic airlines further support the acquisition rationale.
Looxent conducted a Commercial Due Diligence to examine potential risks of market contraction post-endemic phase, assess Target’s route expansion opportunities and competitiveness, identify additional prospects and threats, and provide a mid- to long-term revenue projection.
“Characteristics of Air Cargo”
The air cargo value chain involves shippers, forwarders, carriers, and consignees. Forwarders vary by scale, from those directly dealing with airlines to smaller ones that rely on consolidators. At Incheon Airport, national carriers Korean Air and Asiana dominate with about 70% combined share, while multiple foreign airlines split the remainder.
“Key Due Diligence Findings and Value-Up Recommendations”
Air cargo rates are volatile, influenced by shifts in both supply and demand, as well as fuel costs. Looxent examined potential rate fluctuations, the likelihood of low-cost carriers entering cargo markets, forwarders’ sentiments towards the target company, growth potential in existing and prospective routes, types of cargo on each route, and the competitive landscape.
We conducted revenue projections based on forecasted regional trade volumes, the target’s competitive differentiation, and customers’ perceived attractiveness of its offerings. Building upon identified business risks and opportunities, we proposed preliminary value-up initiatives.
“Deal Closing and Ongoing PMI Project”
Following the due diligence, the PE firm completed funding and closed the deal. Looxent is now working with the new management team on a Post-Merger Integration (PMI) project. This initiative encompasses IT enhancements, organizational restructuring, updated evaluation and compensation frameworks, KPI-driven management infrastructure, new route development, refined pricing strategies to boost top-line growth, and targeted cost-efficiency measures to improve the bottom line.
The target company is Korea’s only dedicated cargo airline, operating short-haul cargo routes primarily across East and Southeast Asia, including China and Japan.
“Growth Potential of the Air Cargo Market and Key Due Diligence Areas”
Global air cargo volumes have historically grown steadily at about 2–3% in line with rising trade. However, factors such as maritime supply chain disruptions, reduced passenger flights, and COVID-19 have accelerated growth above 10% since 2020. Long-term prospects indicate annual growth of over 4% as global trade remains robust and air cargo solidifies its role as a stable alternative to maritime shipping disruptions. While automotive parts, IT devices, and semiconductors dominate air cargo shipments, categories now extend to cosmetics, daily goods, pharmaceuticals, and fresh food.
For the private equity (PE) firm, growth in perishable goods due to expanded cold chain capacity, rising demand from high-value industries like semiconductors, automotive electronics, and pharmaceuticals, as well as the surge in e-commerce, reinforce a positive outlook. Incheon Airport’s advanced trade infrastructure and the potential for this nascent player to expand market share against major domestic airlines further support the acquisition rationale.
Looxent conducted a Commercial Due Diligence to examine potential risks of market contraction post-endemic phase, assess Target’s route expansion opportunities and competitiveness, identify additional prospects and threats, and provide a mid- to long-term revenue projection.
“Characteristics of Air Cargo”
The air cargo value chain involves shippers, forwarders, carriers, and consignees. Forwarders vary by scale, from those directly dealing with airlines to smaller ones that rely on consolidators. At Incheon Airport, national carriers Korean Air and Asiana dominate with about 70% combined share, while multiple foreign airlines split the remainder.
“Key Due Diligence Findings and Value-Up Recommendations”
Air cargo rates are volatile, influenced by shifts in both supply and demand, as well as fuel costs. Looxent examined potential rate fluctuations, the likelihood of low-cost carriers entering cargo markets, forwarders’ sentiments towards the target company, growth potential in existing and prospective routes, types of cargo on each route, and the competitive landscape.
We conducted revenue projections based on forecasted regional trade volumes, the target’s competitive differentiation, and customers’ perceived attractiveness of its offerings. Building upon identified business risks and opportunities, we proposed preliminary value-up initiatives.
“Deal Closing and Ongoing PMI Project”
Following the due diligence, the PE firm completed funding and closed the deal. Looxent is now working with the new management team on a Post-Merger Integration (PMI) project. This initiative encompasses IT enhancements, organizational restructuring, updated evaluation and compensation frameworks, KPI-driven management infrastructure, new route development, refined pricing strategies to boost top-line growth, and targeted cost-efficiency measures to improve the bottom line.