Korean Air Posts First Quarter Loss of $598mn

By David Hopwood | May 20, 2020

The list of airlines that have been affected by the COVID-19 pandemic is endless. While some have already succumbed to this cataclysm, few are still hanging in there, doing everything they can to see this storm through. According to recent reports, South Korean flag bearer – Korean Air – has posted a net loss of 736.86bn won (that is, $598mn) for the January-March quarter of this year. For the last quarter too, the airline had posted a loss of 116.95bn won (approximately, $87mn) as the commercial traffic in Asia and Asia-Pacific region is down to less than 5% in these afflicting times.

The loss bore by the company was still less than what experts and analysts had predicted. Korean Air did, afterall, save substantial money on fuel (thanks to the extremely low fuel prices currently) and by cutting payroll for employees.

Korean Air aircraft parked at Seoul. ©TBS

Korean Air President Woo Kee-hong said in a statement:

‘Executives have forgone up to 50 percent of their salaries and 70 percent of employees are taking leave. The company was able to minimise losses with their support despite many challenges presented by the unprecedented COVID-19 crisis.’

The airline also mentioned that revenue passenger kilometre (RPKs) from the same period, last year, has decreased by almost thirty percent due to the ongoing global aviation lockdown. The company has also predicted losses in the second quarter of the year, while for third and fourth quarter, the airline forecasts market to be neutral (neither much profit, nor any significant loss). However, on the bright side, as we had reported for Qatar Airways, cargo operations are booming for Korean Air too. Cargo revenue has increased by roughly three percent from the previous year, thanks to increased freighter operations and usage of passenger jets as freighters to improve the cargo efficiency.

The airline stated in a statement:

‘This cargo capacity shortage (that the industry shall be facing down the line) will enable Korean Air to continue its profitable freight operations.’

Korean Air Lines Co. freight planes parked on the tarmac at the company’s cargo terminal at Incheon International Airport in Incheon. ©Cho/Bloomberg

Korean Air is one of the few airlines that have been able to stay out of any significant danger in this pandemic, despite being in loss. Earlier, Asiana Airlines, South Korea’s second-largest carrier, also posted its first-quarter net losses to be greater than 680bn won ($550mn). However, Asiana’s condition, financially and fleet-wise, isn’t nearly as good as Korean Air’s.

What do you think of airlines in Asia? Are these carriers subject to a difficulty much larger in scale than rest of the world?

Let us know in the comments!

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