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Korean Air Reports Q3 Profit

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Korean Air has reported an operating profit of 100.1 billion KRW for the third quarter of 2009 compared to loss of 25.1 billion KRW a year earlier, on a 14.7% drop in operating expense thanks to lower fuel prices and a stronger Korean Won, as well as better performance in its international passenger business.

 During the quarter, the airline achieved net income of 264 billion KRW compared to a loss of 684.1 billion KRW in the previous year. Operating revenue held steady at 2476.6 billion KRW during the quarter in spite of a challenging operating environment for the aviation industry.

International passenger business performed well during the quarter and remained the largest contributor to operating revenue with a 55.7% share, up 2.1 percentage points from the previous year. Passenger sales from Japan were up 36.7% Y-o-Y on a stronger Yen against the Won. Passenger traffic on US routes also improved following the implementation of the Visa Waiver Agreement.

International passenger capacity and traffic were up 3.7% and 4.4% Y-o-Y to 19,428 million ASK and 14,516 million RPK during the quarter.

 In the month of September 2009, international passenger capacity and traffic were particularly strong, rising 9.4% and 11.6% Y-o-Y, respectively, as the world economy showed signs of a recovery. Easing concerns over the spread of the H1N1 influenza virus also helped revive demand for air travel.

The capacity of the airlines cargo business was down 6.5% Y-o-Y to 2,782 million AFTK on falling global demand. On a month to month basis, however, demand for cargo rose gradually as reflected in an improvement in capacity, from 898 million AFTK in July to 980 million AFTK in September this year.

 During the reporting period, Korean Air made concerted efforts to maximize the profitability of the cargo business through different initiatives, including active sales promotion, capacity reduction and route restructuring.

To expand its fleet, the airline has orders for Boeing 787s and Airbus 380s. One aircraft will be delivered by the end of this year, and the airline expects to add seven more to its fleet in 2010 and another 15 in 2010.

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