Deficit Streak Over? Haizeu Airlines Likely to Post Annual Surplus as Air Routes Open

Dishonor of Three Consecutive Years of Deficits from 2020 to 2022
Operating Profit Increases Due to Rising Aircraft Demand and Improved Subsidiary Performance

Haizeu Aviation, which recorded losses for three consecutive years, succeeded in turning a profit in the second quarter of this year, signaling a positive outlook for achieving an annual profit. Although aircraft parts supply was delayed due to the closure of air routes after COVID-19, the situation has improved since last year, leading to better performance. Currently, the order backlog exceeds 1 trillion KRW.

Haizeu Aviation recorded sales of 13.46782 billion KRW and an operating profit of 951.68 million KRW in the second quarter on a separate basis this year. Compared to the same period last year, sales increased by 117.49%, and operating profit turned positive. With this turnaround in the second quarter, the company also recorded a profit for the half-year period. Sales and operating profit for the half-year were 25.1064 billion KRW and 177.07 million KRW, respectively.

Haizeu Aviation is a comprehensive aircraft parts company that assembles and processes aircraft airframe structures (main wings) and rear fuselage parts. Its major clients include Boeing, Commercial Aircraft Corporation of China (COMAC), Korea Aerospace Industries, and Korean Air.

Haizeu Aviation recorded losses for three consecutive years from 2020 through last year due to reduced parts demand caused by the closure of air routes. In 2020, sales were halved compared to the previous year, recording 29.1 billion KRW, and operating loss was 3.6 billion KRW. Operating losses of 11.8 billion KRW and 7.8 billion KRW were recorded in 2021 and last year, respectively.

If losses continued this year, the company could have been designated as a management item, but that possibility is very low. Boeing, Haizeu Aviation’s major client, recorded sales of 19.8 billion USD (approximately 25.25 trillion KRW) in the second quarter, an 18% increase compared to the same period last year. As aircraft deliveries increased, Haizeu Aviation’s sales also rose accordingly. The improved performance of Haizeu Aviation’s subsidiaries also contributed. Haizeu Aviation currently owns three subsidiaries, including its U.S. corporation, Gaon I&T, a company developing aviation-related textile materials, and Haizeu Composite Industry, a manufacturer and producer of aircraft parts and composite materials. A Haizeu Aviation official said, "Haizeu Composite Industry turned profitable this year, and Gaon I&T has been steadily generating operating profits."

The outlook for Haizeu Aviation’s performance in the second half of the year is also positive. The current order backlog amounts to 1.19074 trillion KRW. A company representative said, "As aircraft demand increased, sales have been rising since the fourth quarter of last year and continued through the first half of this year," adding, "Before COVID-19, monthly deliveries were around 50 units, dropped to 30 units, but recently have risen to about 40 units." He further added, "Internally, we expect an increase to the high 50s to 60 units per month."

Haizeu Aviation also plans to strengthen new businesses. Currently, Haizeu Aviation is developing a drone business through Haizeu Composite Industry and its U.S. corporation. The focus is on the cargo transportation sector. Recently, it signed a technology support, repair and maintenance, and logistics service contract with Doosan Mobility Innovation (DMI) and DMI’s hydrogen fuel cell drones in the U.S.

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