South Korean flag carrier Korean Air posted a first quarter net loss of 736.86 billion won (US$598 million) for the January-March quarter from 116.95 billion won a year earlier as it and every other airline in the world tries to survive the COVID-19 pandemic that has shut down international commercial passenger traffic. The loss was a bit less than analysts had forecast after the airline saved money on fuel and by cutting its payroll. “Executives have forgone up to 50 percent of their salaries and 70 percent of employees are taking leave. The company was able to minimise losses with their support despite many challenges presented by the unprecedented COVID-19 crisis,” Korean Air President Woo Kee-hong said in a statement.
The airline said it recorded a 29.5 percent decrease in revenue passenger kilometres (RPKs) from the year-earlier period due to the fall in demand across all routes. Cargo rose by 3.1 percent increase in freight ton kilometres from a year earlier because of increased freighter operations, improved capacity utilisation and the use of passenger jets as freighters, the airline said.
Download Korean Air’s earnings presentation here.
Korean Air said it expected further losses due to the COVID-19 pandemic in the second quarter. But the cargo market is also expected to experience a further supply shortage due to the reduction and suspension of passenger flights worldwide, the carrier said, enabling it to continue profitable cargo operations. The company said it was also raising cash and planned to sell 1 trillion won (US$820 million) in new shares.
Also on Friday, Asiana Airlines, the country’s second-largest carrier, said its first-quarter net losses deepened to 683.26 billion won from 89.18 billion won a year ago. Asiana shifted to an operating loss of 292.02 billion won in the first quarter from an operating profit of 7.16 billion won a year ago. Sales fell 25 percent to 1.29 trillion won from 1.72 trillion won. Asiana and Korean Air plan to resume flights on dozens of their international routes from June as they prepare for increased travel demand after countries ease entry restrictions. Korean Air is reopening 19 routes, which include those to Washington, D.C., Seattle, Vancouver, Toronto, Frankfurt, Singapore, Beijing and Kuala Lumpur. Asiana’s 13 routes include Seattle, Beijing and Shanghai.
Low-cost carriers also suffered heavy losses in the first quarter in the face of worsened business environments. Jeju Air Co., the country’s biggest low-cost carrier, swung to a net loss of 101 billion won in the first quarter from a net profit of 42 billion won a year ago. Korean Air’s affiliate Jin Air also shifted to a net loss of 45.8 billion won from a net profit of 31.8 billion won during the same period. Asiana’s affiliate Air Busan also swung to a net loss of 61.8 billion won from a net profit of 1.9 billion won.
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