Korean Air said it posted revenue of 2.8052 trillion won (US$2.3168 billion) and a record quarterly operating profit of 788.4 billion won (US$651.1 million) in its first-quarter financial results. The airline said its previous record operating profit was in Q4 2021 at 704.4 billion won.
Revenue from the airline’s passenger flight operations in the first quarter increased by 128 percent year-on-year to 359.8 billion won. Although passenger demand remained sluggish due to the spread of the COVID-19 Omicron variant, demand is gradually recovering as countries ease their entry restrictions one by one. On 21 March, Korea lifted the mandatory quarantine for fully vaccinated travelers, helping to boost travel demand.
The airline’s cargo flight operations pulled in a revenue of 2.1486 trillion won in the first quarter. Uncertainties in the air cargo market persisted due to various external factors such as global supply chain bottlenecks, reduction in capacity on Europe routes and high fuel prices. Korean Air is taking preemptive measures to maintain its air cargo capacity through close management of ground handling operations and flexible network operations. The airline maximised its revenue through increasing freighter operation rates and using grounded passenger jets on cargo routes.
Korean Air’s passenger business is expected to quickly recover in 2022, as more countries continue to open up their borders and ease entry restrictions. The recovery of passenger demand will vary by route and region, and the airline will closely monitor and flexibly respond to the market and changing quarantine policies of its network. Recovery in global passenger demand is foreseen to gradually boost global air cargo capacity, but instability in regional air cargo markets is expected to persist due to major Chinese city lockdowns and the war in Ukraine. Korean Air will tackle such uncertainties by actively responding to market changes through flexible operations and effective management of ground handling operations.
While the entire industry was suffering from COVID-19, Korean Air significantly improved its financial structure by reducing debt. At the end of 2019, the airline’s debt ratio was 814 percent, but as of the first quarter of 2022, the number decreased by 559 percentage points to 255 percent, the lowest debt ratio since 2011, when International Financial Reporting Standards (IFRS) were introduced. Moreover, Korean Air has secured over 4 trillion won worth of cash and cashable assets, enabling the airline to flexibly respond to various market uncertainties such as increasing interest rates. Korean Air plans to maintain financial stability through profitable operations and by managing its debt ratio and liquidity.