The Aviation Industry Hit Hard by COVID-19... "The Second Quarter Is Even More Frightening"

The departure hall of Terminal 1 at Incheon International Airport is quiet on the 29th, ahead of the golden holiday weekend. Photo by Moon Honam munonam@

[Asia Economy Reporter Yu Je-hoon] The aviation industry, pushed to the brink of collapse by the novel coronavirus infection (COVID-19), is expected to record losses for the first quarter. However, both inside and outside the industry, concerns are rising that "the real crisis starts now," since the suspension of international flights due to COVID-19 only began in earnest from March.

According to the aviation industry on the 9th, Jeju Air announced preliminary results showing an operating loss of 65.7 billion KRW and a net loss of 101.4 billion KRW for the first quarter. Jeju Air is the first listed domestic airline to announce its first-quarter results.

Typically, the first quarter, along with the third quarter which is the summer vacation season, is considered a "peak season" for airlines. However, the operating loss recorded by Jeju Air in the first quarter alone (65.7 billion KRW) is nearly double the total deficit of last year (32.9 billion KRW).

Sales, which had been rapidly growing every year, also plummeted. Jeju Air's first-quarter sales amounted to 229.2 billion KRW, down 41.7% compared to the previous year. A Jeju Air official stated, "The reduction of routes and the sharp decline in travel demand due to the COVID-19 situation are analyzed as the causes," adding, "It is an unprecedented crisis situation."

In the earnings announcements set to intensify from next week, the prevailing view is that other airlines besides Jeju Air will also fail to avoid losses. The securities industry expects major airlines to incur losses in the range of 200 to 300 billion KRW, and low-cost carriers (LCCs) to face losses amounting to several tens of billions of KRW.

However, the industry is more concerned about second-quarter results than those of the first quarter. In fact, during the first quarter, normal operations were maintained except for some routes to China and others until the rapid spread of COVID-19 from the end of February to March.

An industry insider said, "In the first quarter, it was still possible to operate normally until January, and February was somewhat bearable," adding, "But the situation is expected to worsen in this quarter (second quarter), when international flights have almost completely stopped."

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