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Korean Air announce positive fourth quarter results but air cargo down

Korean Air announced today its results for the fourth quarter and full year ended 31st December  2011.

The airline posted operating revenue of 3,062.1 billion KRW for the fourth quarter of 2011, up 7.7% compared to the same period last year, and an operating profit amounted to 76.8 billion KRW. International passenger and cargo businesses remained the major revenue contributors for the airline in Q4, accounting for 55.1% and 29.3% of the operating revenue respectively. Compared to the same period last year, net income for Q4 returned to the black and reached 125 billion KRW.

For the full year of 2011, Korean Air recorded operating revenue of 11,805.3 billion KRW, up 4.7% year-on-year, and operating profit of 394.1 billion KRW. However, due to a surge in jet fuel expenses, a net loss is resulted during the period.

International Passenger Business

During this period Korean Air saw increased traffic across all routes, including Americas (up 12%), South-east Asian countries (up 12%), and China (up 14%); the international passenger segment recorded a Y-o-Y growth of 10.6% and 10.2% in passenger carrying capacity and traffic, reaching 21,081 million ASK and 15,774 million RPK respectively.    Overseas inbound traffic lifted 15% compared to the same period last year.

According to IATA, international air traffic is expected to grow by 5.2% in 2012, in which the Asia region growth rate is projected to exceed 7%, and hence passenger traffic is expected to continue on a steadily upward trend. In addition, with the introduction of new routes (e.g. IncheonDaNang, Incheon – Gatwick, Incheon – Urumqi and Incheon – Nairobi) and stepping up the frequency of flights on selected routes, such as Busan – Hong Kong , Incheon – Qingdao, Incheon – Tianjin, Jeju – Beijing and etc., Korean Air certainly sees potential growth in its passenger traffic.

With the latest addition of more fuel efficient aircraft to the fleet, including the Airbus A380 and Boeing B777-300ER, the airline is expected to see improvement in profitability.

Cargo Business

Cargo traffic recorded a year-on-year fall of 6.7% to 2,284 million FTK as it saw a year-on-year decrease of 10% and 4% in Korea outbound traffic and transit traffic respectively. While outbound air cargo traffic from China reported a slump, outbound traffic from south-east Asian Countries, Japan, Americas and Europe recorded increases of 6%, 5%, 6% and 3% respectively. In Q4, the airline saw the return of wet-lease aircraft in October and November for profitability improvement. Charter flights to Sao Paulo and Lima were also put into operation in the quarter.

Going into 2012, air cargo traffic is expected to be on a steadily upward trend with the Free Trade Agreement between Europe and Korea and The London Olympic Games. Korean Air will strive to enhance profitability and sustain growth by focusing operation on new markets development. Korean Air also sees the potential of leveraging Brazil as a hub and build its cargo network in Latin America.

Korean Air will continue to expand its business prudently while enhancing the quality of its service in 2012. With its long-standing commitment to achieving “Excellence in Flight”, Korean Air aims to provide the best quality to its customers while bringing the best returns to its shareholders.

* Exchange rate on December 31, 2011: 1 US Dollar = 1153.3 KRW

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