Korean Air Posts Operating Profit of 124.5 Billion KRW in Q1, Driven by Cargo Business Turnaround

On the 26th, the initial batch of Pfizer vaccines secured through the international vaccine supply organization 'COVAX facility' was unloaded from a Korean Air cargo plane at the Incheon International Airport Cargo Terminal in Yeongjongdo and transported. / Yeongjongdo - Photo by Airport Photographers Group

[Asia Economy Reporter Dongwoo Lee] Despite the adverse effects of COVID-19, Korean Air recorded a profit in the first quarter of this year.

Korean Air announced on the 14th that, based on separate financial statements, it posted sales of 1.7498 trillion KRW and an operating profit of 124.5 billion KRW in the first quarter. The net loss for the period was 28.8 billion KRW, a significant reduction compared to the net loss of 692 billion KRW in the same period last year.

In the first quarter of last year, Korean Air recorded an operating loss of 65.7 billion KRW due to the impact of COVID-19, but turned to a profit this year thanks to the expansion of cargo transportation. It has maintained profits for four consecutive quarters since the second quarter of last year.

Cargo Business Drives Performance... Offsets Decline in International Passenger Demand

The cargo business led the overall performance. Korean Air's cargo business sales in the first quarter reached 1.353 trillion KRW, more than doubling compared to the same period last year. Although air cargo supply using belly (cargo hold under passenger aircraft) transport decreased due to the prolonged COVID-19 pandemic, the company maximized supply by increasing the utilization rate of cargo aircraft, operating cargo-only passenger flights, and deploying passenger aircraft converted for cargo use.

The passenger business in the first quarter continued to experience weak demand due to ongoing entry restrictions imposed by various countries amid rising COVID-19 cases. Korean Air explained that it is actively striving to secure passenger demand by organizing charter flights for returnees and business trips, as well as operating non-landing sightseeing flights.

For the second quarter, the cargo business is expected to continue strong performance through the first half of the year due to a shortage of belly supply from passenger aircraft, a recovery trend in international trade, and increased demand from shipping logistics congestion. Based on its expertise in operating cargo routes, Korean Air plans to flexibly utilize its fleet to proactively respond to market volatility expected in the second half of the year, including gradual supply expansion by other airlines and improvements in shipping logistics transport.

Securing Liquidity through Capital Increase... Recovery of Financial Stability

The passenger business will operate routes flexibly, considering factors and trends affecting the recovery of international passenger demand, such as entry restrictions by major destination countries and COVID-19 vaccination progress. The company is also closely responding to changes in the air travel environment, including vaccine passports and travel bubbles.

Korean Air secured approximately 3.35 trillion KRW in liquidity last year through the sale of its in-flight meal business, capital increase, and borrowings. Additionally, it raised an extra 3.3 trillion KRW in capital through a capital increase conducted in March this year.

Korean Air stated, "The debt ratio has rapidly improved to 294%, down 340 percentage points from the end of last year, indicating a swift recovery in financial stability," and added, "We plan to complete the sale of non-core assets such as the Songhyeon-dong site within this year to continue proactive liquidity securing and efforts to improve the financial structure."

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