Korean Air Posts Q2 Operating Profit of 197 Billion KRW... Cargo Business Achieves Record High Performance

At the Korean Air Cargo Terminal at Incheon International Airport, a cargo plane appears to be smiling brightly. In the New Year of the Year of the Ox, we hope that the novel coronavirus disease (COVID-19) will disappear and the skies will open. / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Dongwoo Lee] Korean Air announced on the 13th that its operating profit based on separate financial statements for the second quarter of this year reached 196.9 billion KRW, a 31% increase compared to the same period last year.

During the same period, sales amounted to 1.9508 trillion KRW, up 16% from the previous year. However, net profit for the period decreased by 20% to 130 billion KRW.

Despite the contraction in passenger demand due to COVID-19, Korean Air has achieved operating profits for five consecutive quarters since the second quarter of last year through maximizing cargo transportation and company-wide cost reduction efforts.

Korean Air recorded cargo business sales of 1.5108 trillion KRW in the second quarter, achieving the highest quarterly performance in its history. The company attributed this to increased corporate inventory replenishment demand amid economic recovery expectations and the expansion of air cargo demand for urgent goods due to shipping supply bottlenecks.

Due to delayed recovery in passenger flight operations and sluggish expansion of belly (lower cargo hold) capacity in passenger aircraft, strong freight rates continued due to supply shortages relative to demand. According to the TAC Index, an air cargo freight rate index announced in Hong Kong, as of the 9th, freight rates on the Hong Kong-North America route recorded $7.94 per kilogram, a 42% increase compared to $5.62 last year.

The passenger business in the second quarter continued to experience weak demand trends due to the spread of COVID-19 variants, but efforts are being made to secure demand mainly through international charter flights and domestic Jeju routes.

Korean Air forecasts that the air cargo market in the second half of this year will continue to face market uncertainties due to the coexistence of increasing vaccination rates and concerns over variant virus spread. However, it expects strong demand for IT and e-commerce cargo driven by corporate inventory replenishment and economic recovery. The company plans to maximize profits by fully utilizing available resources such as its global network, cargo aircraft, and cargo-only passenger aircraft.

Korean Air stated, "The air passenger market in the second half of this year is also expected to continue experiencing weak demand, making it difficult to predict the timing of recovery," but added, "We plan to operate routes flexibly by comprehensively considering entry restrictions of major destination countries, vaccination trends, the introduction of vaccine passports, and the expansion of travel bubbles."

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