Flag carrier Korean Air announced Thursday (4 February) that it posted a net loss of 228.1 billion won (US$209.7 million) due to net interest expense, but said the loss was largely reduced from the 568.7 billion won net loss in 2019. The company said it earned 7.405 trillion won (US$6.806 billion) in sales and 238.3 billion won (US$219 million) in operating profit for the year.
The decline in passenger demand due to COVID-19 continued throughout the year, causing gross sales to fall 40 percent year-on-year. Passenger sales fell 74 percent year-on-year. Cargo sales increased by 66 percent compared to last year by increasing the operation rate of freighters and utilising idle passenger planes. Air cargo sales increased as demand for COVID-19 diagnostic kits and automobile parts increased, with some demand shifting from sea cargo to air cargo.
Operating profit was achieved because of the airline’s strong cargo business and company-wide efforts to cut costs. Meanwhile, reduced passenger capacity and falling oil prices lowered fuel consumption and jet fuel costs. Related costs such as facility fees also were reduced due to decreased passenger operations. Labour costs also declined slightly as employees took rotational leaves. Accordingly, total operating expense was reduced by 40 percent in 2020 compared to 2019.
Last year, Korean Air successfully increased KRW 1.1 trillion worth of capital by issuing new shares and completed the sale of its inflight catering and duty-free business unit at KRW 981.7 billion. Currently, the airline is finalising the sale of KAL Limousine and Wangsan Leisure Development CO. Ltd.. Also, Korean Air is seeking to secure more liquidity by selling its shares in Hanjin International that operates the Wilshire Grand Center in Los Angeles, and is discussing the sale of the company’s property in downtown Seoul with the Seoul metropolitan government.
Korean Air also is in the process of acquiring Asiana Airlines to stabilise the Korean aviation industry that’s suffering from the pandemic and to ensure sustainable growth of the domestic aviation market. Korea is the world’s 10th largest economy, and its economic health is important globally.