The COVID-19 Wave... Incheon International Airport Expected to Post Deficit for the First Time in 17 Years

Sales Down 42% and Net Income Expected to Turn Negative
Mid-to-Long-Term Core Business Initiatives - Warning Signs for Financial Soundness

[Asia Economy Reporter Yu Je-hoon] Due to the sharp decline in air travel demand caused by the COVID-19 pandemic, Incheon International Airport Corporation is expected to post a deficit this year for the first time in 17 years.

According to Incheon International Airport Corporation's "2020 Financial Outlook" released on the 23rd, the corporation is predicted to record a net loss of 16.3 billion KRW this year, turning to a deficit. This represents a decrease of approximately 102% compared to last year's net profit of 882.3 billion KRW.

Sales revenue is also expected to fall to 1.592 trillion KRW, down 42% from the previous year. If this scenario materializes, the corporation will record a deficit for the first time since turning a profit in 2004 after its opening.

This is due to the increasing decline in air passenger demand caused by COVID-19. As of the period from the 9th to the 15th, the average daily number of passengers at Incheon Airport was about 4,000, a 97.3% decrease compared to the previous year. The corporation forecasts that international passengers at Incheon Airport will decrease by 79.8% year-on-year to 14.26 million this year.

With the expectation of recording the first deficit since its opening, the corporation’s debt, currently around 3 trillion KRW, is also expected to increase. To respond to the COVID-19 crisis, the corporation plans to borrow an additional 1.1988 trillion KRW this year through bond issuance and other means.

The corporation is concerned that this deterioration in profitability could negatively impact the promotion of mid- to long-term core projects and financial soundness. A corporation official stated, "Originally, the fourth phase expansion project, which requires a total investment of about 4.7 trillion KRW, was planned to be fully funded by the corporation’s own revenue without government financial support," adding, "If the COVID-19 situation worsens and the corporation’s own revenue significantly decreases, it may be necessary to increase government financial support and fundamentally reconsider funding methods."

Meanwhile, despite the COVID-19 crisis, the corporation is implementing support measures including a 181 billion KRW reduction in usage fees and a 398 billion KRW deferral of fee payments for airlines, airport commercial facilities (duty-free shops, food and beverage stores, etc.), and ground handling companies to secure competitiveness in the airport industry ecosystem.

Incheon International Airport Corporation President Koo Bon-hwan said, "This is an unprecedented crisis," and added, "We will establish ourselves as a company continuously trusted by the public through effective operation of the ongoing emergency management system and proactive management improvement efforts."

This content was produced with the assistance of AI translation services.