Korean Air Reports Q2 Operating Profit of 735.9 Billion Won... "No Issues Expected in Second Half"

[Asia Economy Reporter Yoo Hyun-seok] Korean Air posted strong earnings in the second quarter, and steady growth is expected to continue in the second half of the year.

According to the aviation industry on the 6th, Korean Air's operating profit in the second quarter was 735.87 billion KRW, a 273.7% increase compared to the same period last year. During the same period, sales rose 70.8% to 3.332387 trillion KRW, and net profit increased 246.6% to 450.414 billion KRW.

Passenger route revenue recorded 874.2 billion KRW, up 307% year-on-year, supported by the easing of the COVID-19 spread and the recovery of travel demand amid the border reopening policies of major countries.

Cargo revenue was 2.1712 trillion KRW, a 44% increase compared to the same period last year. Despite ongoing global logistics supply chain disruptions due to the prolonged Ukraine crisis and lockdown measures in key regions of China, strong demand in automotive, semiconductor, electronic equipment, and parts sectors, as well as active acquisition of COVID-related project items (such as diagnostic kits), drove the strong performance.

Korean Air expects passenger business in the second half to see slower demand recovery than initially anticipated due to external factors such as concerns over a resurgence of COVID-19 and oil price volatility. The company plans to gradually increase supply to 50% of pre-COVID-19 levels by September, aiming to respond flexibly to market demand.

Brokerages forecast that Korean Air will continue to deliver solid results in the second half. Choi Go-woon, a researcher at Korea Investment & Securities, said, "Korean Air plans to increase passenger supply from 31% in the second quarter to 50% in the third quarter compared to pre-pandemic levels. Since supply is still insufficient and the company is in a more favorable position than competitors, an 80% load factor and fares over 30% higher are expected to be maintained." He added, "In conclusion, 2022 is unfolding as the best-case scenario where international passenger traffic recovers the fastest among domestic carriers before the cargo benefits decline."

Park Sung-bong, a researcher at Hana Financial Investment, said, "Although Korean Air's cargo volume has shifted to a decline since the peak in the fourth quarter of last year, the decrease is not significant. Since the increase in belly cargo supply via passenger aircraft is expected to be slower than anticipated, strong cargo performance is expected to continue in the third quarter."

However, there are also concerns that the spread of COVID-19 could be a variable. Researcher Park explained, "Korean Air plans to increase supply more aggressively than the government's international flight normalization policy, expanding to 50% of pre-COVID-19 supply levels by September. Recently, rapid COVID-19 spread has raised concerns that the recovery of international flights may be slower than expected."

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