Korean Air recorded a fourth consecutive quarter of operating profit of KRW 124.5 billion (USD 110 million) thanks to its continuous efforts to boost cargo operations and reduce costs. Sales fell 24% year-on-year to KRW 1.7498 trillion (USD 1.544 billion) due to passenger demand drop caused by the COVID-19 pandemic.
Compared to 2020 Q1, cargo sales more than doubled to KRW 1.353 trillion. Despite decreased passenger flight belly capacity because of the pandemic, Korean Air maximized cargo operations by fully utilizing its 23 freighters, operating cargo-only passenger flights, and converting passenger jets into freighters. Also, as vaccination progresses, expectations on global economic recovery grow, which helps increase air cargo demand.
Passenger demand is still low due to continued travel restrictions of each country. Despite the challenges, Korean Air boosted passenger sales by operating chartered flights for repatriation and business, as well as ‘flights to nowhere.’
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The cargo business in the second quarter is expected to be positive due to a lack of belly cargo supply of passenger flights, a recovery of global trade, and increased shipping and logistics demand. Korean Air plans to promote its cargo business now using its network, operations, and experience rather than later this year when more airlines jump into the cargo business and shipping disruption improves.
Korean Air’s passenger business will operate its network flexibly considering factors and trends that affect the recovery of international passenger demand, including immigration restrictions of main routes and vaccination rates. The airline also will closely monitor and take action to change the environment of air travel such as vaccine passports or travel bubbles.
Korean Air secured KRW 3.35 trillion last year by the sale of its inflight catering and duty-free business, issuing new shares, and loans. In March this year, the airline also raised an additional KRW 3.3 trillion in new stock. As a result, the airline’s financial stability has rapidly improved, which decreased its debt ratio from 340% to 294% at the end of last year. Korean Air will continue its effort to expand its capital and improve its financial structure through the sale of non-core assets this year.
